Difference between revisions of "Total Loss Absorbing Capacity"

From ACT Wiki
Jump to: navigation, search
(Make branding consistent.)
(To cover publication of FSB consultation November 2014 and continuing controversy/uncertainties)
Line 1: Line 1:
(TLAC).
+
(TLAC, sometimes T-LAC).
  
 
''Bank [[resolution]] and [[recovery]]''
 
''Bank [[resolution]] and [[recovery]]''
  
The term eventually favoured by the [[FSB]] (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 term eventually favoured by the [[FSB]] (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 FSB uses the abbreviation TLAC.
  
 
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.
 
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.
 
As at the end of 2014, TLAC is due to be applied to [[G-SIB]]s not before 1 January 2019.
 
  
 
External TLAC applies to each resolution entity in a bank group.
 
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.
 
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.
 +
 +
As at the end of 2014, TLAC is due to be applied to [[G-SIB]]s 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. 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.
  
 
== See also ==
 
== See also ==

Revision as of 10:54, 24 December 2014

(TLAC, sometimes T-LAC).

Bank resolution and recovery

The term eventually favoured by the FSB (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 FSB uses the abbreviation TLAC.

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.

As at the end of 2014, TLAC is due to be applied to G-SIBs not before 1 January 2019. The FSB published a consultation in November 2014 [1] on the working of a TLAC approach to bank resolution. The incompleteness of the process proposed and its (perhaps inevitable) pro-cyclicality have caused concern (e.g. [2]). Development of the process is likely to continue for a long time and to face controversy in many jurisdictions.

See also