EU SRB Liquidity Funding in Resolution

On Apr. 30, EU SRB issued new guidance on liquidity in resolution.

  • EU SRB has published new guidance for banks on liquidity and funding in resolution.
  • Follows EU SRB Oct. 2019 issued consultation re expectations for banks, see #66575.
  • New Guidance
  • Market participants likely reluctant to roll-over or provide new funding to bank in crisis.
  • Even after successful resolution, liquidity stress may persist for some time due to the asymmetry of information regarding viability of the resolved bank’s business model.
  • Banks need to ensure they continue to meet their obligations during resolution phases.
  • Expectations for Banks
  • Methodologies to estimate liquidity needs for implementation of resolution strategy.
  • Measure, report and forecast their liquidity position and relevant liquidity metrics.
  • Identify and mobilize assets to be used as collateral to obtain liquidity in resolution.
  • Anticipate legal, regulatory, operational obstacles to mobilization in a stressed market.
  • Focuses on estimation of liquidity needs to enhance banks’ resolvability for resolution.
  • Banks can expect to be assessed on this element in the 2021 resolution planning cycle.
  • Next Steps
  • There will be further guidance for the two remaining elements published in 2022.
  • Expectations are subject to gradual phase-in according to general phase-in dates.
  • Expectations on liquidity and funding in resolution expected to be met by end of 2023.

Regulators EU SRB
Entity Types B/D; Bank; BHC; Depo; Exch; SIFI
Reference Gd, PR 4/30/2021
Functions Financial; Reporting; Resolution; Risk; Treasury
Countries European Union
Products Banking; Clearing; Derivatives; Equity; Securities
Regions EMEA
Rule Type Guidance
Rule Date 4/30/2021
Effective Date 4/30/2021
Rule Id 104268
Linked to N/A
Reg. Last Update 4/30/2021
Report Section EU

Last substantive update on 05/03/2021