Debt Office adapts methodology to assess eligibility for simplified obligations in resolution planning

News 11 April 2019

The Debt Office, as resolution authority, has adapted its methodology for determining whether institutions should be subject to simplified obligations in resolution planning.

The EU Commission has resolved to adopt the proposed Delegated Regulation by the European Banking Authority (EBA) regarding regulatory technical standards that specify criteria for assessing the impact of an institution’s failure on financial markets, other institutions and funding conditions.¹ The Debt Office, as resolution authority, has therefore adapted its methodology for determining whether institutions should be subject to simplified obligations in resolution planning.

With the adapted methodology, the Debt Office conducts the procedure to determine whether to grant simplified obligations in two steps. First, a quantitative assessment is made based on the Other Systemically Important Institutions (O-SII) score calculated by the Swedish Financial Supervisory Authority (FI) as part of its assessment of whether an institution is systemically important. The Debt Office has set the threshold for direct qualification for complete obligations at an O-SII score of 105, with the possibility to make exceptions for development banks. For institutions with O-SII scores below the threshold value, a qualitative assessment is made of how the institution’s failure could affect financial markets, other institutions, financial conditions or the economy in general. The Debt Office makes an overall assessment of the criteria set out in the Delegated Regulation, which include determining the extent to which an institution conducts operations deemed critical in Sweden or other Member State.

For further information on the assessment, see Delegated Regulation on simplified obligations.

 ¹COMMISSION DELEGATED REGULATION (EU) 2019/348 of 25 October 2018 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for assessing the impact of an institution's failure on financial markets, other institutions and funding conditions.