30 November 2023

ECON briefing: Public hearing with D. Laboureix, Chair of the Single Resolution Board

Report on smaller banks, Updated resolvability assessment, SRB study on CMDI reform impact, Court confirmed the SRB's treatment of Banco Popular shareholders and creditors, Review of three external papers “Do "white knights" make excessive profits in bank resolution?", Liquidity in resolution...

Public hearing with D. Laboureix, Chair of the Single Resolution Board
Banking Union Scrutiny

This briefing has been prepared for the public hearing with the Chair of the Single Resolution Board (SRB), Dominique Laboureix, scheduled for 4 December 2023.
This briefing addresses:
• Report on smaller banks
• Updated resolvability assessment
• SRB study on CMDI reform impact
• Court confirmed the SRB's treatment of Banco Popular shareholders and creditors
• Review of three external papers “Do "white knights" make excessive profits in bank resolution?"
• Liquidity in resolution
• Update on the SRB’s strategic review and the 2024 work programme
• MREL dashboard Q1 2023
The SRB’s Report on smaller banks
In October, the SRB published for the first time a report on resolution planning and crisis management for smaller banks, known as less significant institutions (LSIs).
In total, there are approximately 2000 small banks in the 21 participating Member States, which are mostly savings or cooperative banks. In terms of regional distribution, there is a strong concentration of LSIs in just three Member states (see also figure 1): Germany in particular accounts for approximately 60% of all LSIs, Austria for another 17%, and Italy, in third place, for 6% (relevant developments in the LSI sector are also portrayed in the ECB’s 2022 LSI supervision report, which notes a continued consolidation trend, albeit at a slower pace than in previous years. Between 2014 and 2021, the number of LSIs has fallen by approximately 1/3. The market share of the LSI sector, however, was not affected by that consolidation: The ECB reports that the continuous growth in average LSI assets resulted in a comparatively stable market share of 18% of total banking assets in the euro area over the same time period).
Figure 1: Geographical concentration of LSIs (absolute numbers, in 2022)
The relevance of the LSI sector, when compared to the national gross domestic product (GDP), is highest in Luxembourg, that due to the financial orientation of its economy has the highest exposure to the banking sector anyway, but it also relevant in Austria, Germany, and Malta (see figure 2)....

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