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EBF Response to EBA consultation paper on the appropriate
target level basis for resolution financing arrangements
under BRRD (EBA/CP/2016/08)
EBF advisor: Timothy Buenker
Publication date: 2 September 2016
- All EBF Members agree that the target level for resolution financing arrangements in total and for individual Members States should not increase or decrease.
- The EBF is therefore not in favour of changing the basis of the target level for resolution financing arrangements in the BRRD at this time. 1 Given the early stage of build-up of resolution funds and further reforms in progress to set TLAC and MREL, we believe it is premature to consider a revision of the legal basis for the resolution financing arrangements.
- Individual contributions by banks should remain dynamic and smooth while being practical, simple and transparent. Changing the rules in the course of this build up phase would add complexity and create confusion in a context where the industry is in dire need of stable rules and cost bases.
- The target level basis for the SRF and the BRRD should be the same to ensure a level playing field between banking union and other banks in the wider EU 28.
- The interaction of the resolution financing arrangements framework with the MREL Review and TLAC implementation needs to be taken into account.
- A stable target level is desirable. Total liabilities as a measure may be unsuitable as a target level, because it is more volatile than one based on covered deposits which tends to be more stable over time. Also, total liabilities varies considerably depending on the applicable accounting framework.