SRB and Bank of England bank resolution cooperation arrangement comes into force
06 January 2021
The Single Resolution Board and the Bank of England continue to work closely together to ensure we have appropriate arrangements in place for effective cooperation on the management of the failure of cross border banks, should the need arise.
This is underpinned by a cooperation arrangement that
came into force on 1 January 2021, and will help to facilitate bank
resolution while maintaining financial stability in the European Union
and the United Kingdom.
The cooperation arrangement sets out the
framework for consulting, cooperating and exchanging information when
preparing for and implementing bank resolution in the United Kingdom and
Banking Union, in line with the rules in both jurisdictions. The
arrangement is based on reciprocity and proportionality, and recognises
the complex nature of cross-border bank operations.
SRB Chair Elke König said: ‘We
welcome the announcement on a Trade and Cooperation Agreement between
the EU and the UK. The banking sector has had a significant lead-in time
to prepare for Brexit. Our focus now is on ensuring that banks are
resolvable and that we maintain good cooperation with the authorities in
the UK and beyond.’
‘Our bilateral cooperation
arrangement with the Bank of England shows the commitment on both sides
to protecting financial stability in the Banking Union and the United
Kingdom.’
The SRB first published its Brexit expectations document
in November 2018. This document covers MREL eligibility, internal loss
absorbency, operational continuity, access to FMIs and other matters. It
has also communicated its expectations on an individual basis to banks.
The SRB put a particular emphasis on issuances under UK law, raising
awareness that they may become ineligible for MREL.
The SRB’s Expectations for Banks document and the MREL policy under the Banking Package also
laid out measures applying to third countries, which now apply to the
UK since 1 January 2021, including relevant clauses to contracts
governed by third country law to ensure eligibility for MREL, enhance
cross-border recognition of resolution actions or support operational
continuity in resolution.
About the Single Resolution Board
The Single Resolution Board (SRB) is
the central resolution authority within the Banking Union, which at
present is 19 eurozone countries, Bulgaria and Croatia. Together with
the national resolution authorities it forms the Single Resolution
Mechanism. The SRB works closely with the European Commission, the
European Central Bank, the European Banking Authority and national
authorities. Its mission is to ensure an orderly resolution of failing
banks, protecting the taxpayer from state bail-outs, which is promoting
financial stability.
© Single Resolution Board
