Total Loss Absorbing Capacity: Difference between revisions
imported>John Grout (To cover publication of FSB consultation November 2014 and continuing controversy/uncertainties) |
(Mend link.) |
||
| (18 intermediate revisions by 2 users not shown) | |||
| Line 1: | Line 1: | ||
''Bank resolution and recovery - bank supervision'' | |||
(TLAC, sometimes T-LAC). | (TLAC, sometimes T-LAC). | ||
The term eventually favoured by the Financial Stability Board (replacing Gone-concern or Gone Concern Loss Absorbing Capacity - GCLAC or GLAC) to describe the debt or capital available to absorb losses in (mostly) banks. The Financial Stability Board (FSB) uses the abbreviation TLAC. | |||
TLAC is closely related to (but different from) the term Minimum Requirement for Own Funds and Eligible Liabilities (MREL) used in the European Bank Recovery and Resolution Directive. | |||
External TLAC applies to each resolution entity in a bank group. | External TLAC applies to each resolution entity in a bank group. | ||
| Line 11: | Line 13: | ||
Internal TLAC applies to subsidiaries of a resolution entity not being resolved in the entity's home jurisdiction and can include for example collateralised guarantees provided from the parent. | Internal TLAC applies to subsidiaries of a resolution entity not being resolved in the entity's home jurisdiction and can include for example collateralised guarantees provided from the parent. | ||
At the end of 2014, TLAC was to be applied to G-SIBs (Global systemically important banks) not before 1 January 2019. The FSB published a consultation in November 2014 [http://www.financialstabilityboard.org/2014/11/adequacy-of-loss-absorbing-capacity-of-global-systemically-important-banks-in-resolution/] on the working of a TLAC approach to bank resolution. | |||
In July 2019 the FSB published, 'Review of the Technical Implementation of the Total Loss-Absorbing Capacity (TLAC) Standard' [https://www.fsb.org/2019/07/review-of-the-technical-implementation-of-the-total-loss-absorbing-capacity-tlac-standard/] which concludes that 'progress has been steady and significant in both the setting of external TLAC requirements by authorities and the issuance of external TLAC by G-SIBs'. | |||
The incompleteness of the process proposed and its (perhaps inevitable) pro-cyclicality have caused concern (e.g. [http://www.voxeu.org/article/bank-resolution-under-t-lac-aftermath]). Development of the process is likely to continue for a long time and to face controversy in many jurisdictions. The FSB, 'will continue to monitor implementation of the TLAC Standard and issuance of TLAC instruments and report at least annually on progress'. | |||
Sometimes known as Total Loss Absorbing ''Capital''. | |||
== See also == | |||
*[[Bailin]] | |||
*[[Bank supervision]] | |||
* [[Capacity]] | |||
*[[Capital adequacy]] | |||
*[[Countercyclical buffer]] | |||
*[[Equity]] | |||
* [[Financial Stability Board]] | |||
*[[Gone concern]] | *[[Gone concern]] | ||
*[[Loss absorbing capacity]] | |||
*[[MREL]] | |||
*[[Primary Loss Absorbing Capital]] (PLAC) | |||
*[[Procyclical]] | |||
* [[Resolution]] | |||
*[[Secondary Loss Absorbing Capital]] (SLAC) | |||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:Financial_risk_management]] | |||
Latest revision as of 10:04, 12 September 2024
Bank resolution and recovery - bank supervision
(TLAC, sometimes T-LAC).
The term eventually favoured by the Financial Stability Board (replacing Gone-concern or Gone Concern Loss Absorbing Capacity - GCLAC or GLAC) to describe the debt or capital available to absorb losses in (mostly) banks. The Financial Stability Board (FSB) uses the abbreviation TLAC.
TLAC is closely related to (but different from) the term Minimum Requirement for Own Funds and Eligible Liabilities (MREL) used in the European Bank Recovery and Resolution Directive.
External TLAC applies to each resolution entity in a bank group.
Internal TLAC applies to subsidiaries of a resolution entity not being resolved in the entity's home jurisdiction and can include for example collateralised guarantees provided from the parent.
At the end of 2014, TLAC was to be applied to G-SIBs (Global systemically important banks) not before 1 January 2019. The FSB published a consultation in November 2014 [1] on the working of a TLAC approach to bank resolution.
In July 2019 the FSB published, 'Review of the Technical Implementation of the Total Loss-Absorbing Capacity (TLAC) Standard' [2] which concludes that 'progress has been steady and significant in both the setting of external TLAC requirements by authorities and the issuance of external TLAC by G-SIBs'.
The incompleteness of the process proposed and its (perhaps inevitable) pro-cyclicality have caused concern (e.g. [3]). Development of the process is likely to continue for a long time and to face controversy in many jurisdictions. The FSB, 'will continue to monitor implementation of the TLAC Standard and issuance of TLAC instruments and report at least annually on progress'.
Sometimes known as Total Loss Absorbing Capital.
