To the Single Resolution Board:
The Bank Policy Institute (BPI)[1] welcomes the opportunity to comment on the Expectations on Valuation Capabilities (EoVC) published for consultation by the Single Resolution Board (SRB),[2] which as proposed would supersede the 2020 SRB Valuation Data Set Instructions (SRB VDS 2020). The EoVC proposal consists of three main components: (1) introducing a Valuation Data Index (VDI) that will make available to the SRB, and to any independent valuer that may ultimately be appointed in the event of an SRB-led resolution, a voluminous and prescriptively specified set of information to be collected on an ongoing periodic basis from banking groups and other entities under the SRB’s remit (In-Scope Entities);[3] (2) requiring In-Scope Entities to submit, on an ongoing basis, the specified set of VDI information (and any other additional information as may be requested by Internal Resolution Teams) to a newly required Data Repository for Resolution (DRR) that must be established and maintained by In-Scope Entities and made accessible to the SRB on a continuous and permanent basis; and (3) establishing new expectations that each In-Scope Entity prepare and make available to the SRB a set of valuation playbooks with a prescribed set of content designed to enable an independent valuer (if ultimately appointed in an SRB-led resolution) to gain an in-depth understanding of such In-Scope Entity’s internal valuation models as well as the governance processes related to such models and their application in business processes.[4]
Although we acknowledge and appreciate the importance of maintaining the necessary capabilities to produce accurate and timely information to support valuation in the event of resolution, we have grave concerns regarding the extensive incremental obligations that would be imposed upon In-Scope Entities by the EoVC, and the fundamental lack of cost-benefit justification and absence of proportionality that is inherent in the specification of these proposed requirements.
We strongly believe that the design of the EoVC is fundamentally flawed as its requirements would represent a substantial and ongoing burden upon the business operations of In-Scope Entities in furtherance of a highly regimented and prescriptive form of preparation for a highly contingent event—preparation that is already well-addressed by existing expectations imposed by the SRB, and by relevant home and host authorities. Indeed, the prescriptive nature of the proposed EoVC is actually at odds with and may ultimately impede the valuation capabilities that have been developed by In-Scope Entities in coordination with the SRB and relevant home and host authorities, as contemplated by international standards adopted by the Financial Stability Board (FSB).[5] Fundamentally, the EoVC proposal marks a pronounced shift in emphasis away from assessing the capabilities of In-Scope Entities to support the valuations that would be called for in a resolution scenario toward mandating the preemptive, prescriptive, and perpetual population of a data repository that will yield minimal incremental benefit (if any) at substantial cost and risk to In- Scope Entities.
As a matter of foundational process, we are highly troubled by the fact that the SRB has not conducted any cost-benefit analysis in connection with the EoVC proposal, in light of the evident substantial costs and questionable benefits that would be associated with its adoption.
The lack of proportionality in the construction of the EoVC proposal is particularly evident in the manner in which the EoVC would apply to the EU-hosted subsidiaries of third-country parent undertakings. With respect to such third-country firms, it is commonly the case that the resolution plans for such firms contemplated by home country authorities—in coordination with the SRB and other relevant EU authorities—would be expressly designed not to involve any need for resolution proceedings to be commenced by the SRB in relation to any of the In-Scope Entities involved. For example, this is the case with regard to third-country global systemically important banks (G-SIBs) that follow a single point of entry (SPE) strategy. But despite the fact that such In-Scope Entities do not represent “resolution entities” within the EU at all, they would nevertheless be subjected under the EoVC proposal to the same full-scope VDI requirements as top-tier EU resolution entities that are explicitly contemplated to enter SRB-led resolution in the event of failure. This represents a doubly disproportionate treatment that would require extensive up-front expenditure of resources to facilitate a form of resolution that is not the first-choice option for either home authorities or the SRB—a “fall-back to a fall-back.” Most concerningly, this emphasis on preparation for execution of a “variant” approach to resolution that departs from the preferred path identified by the third-country home and EU host authorities undermines the progress achieved by EU subsidiaries of non-EU firms and could in fact detract from appropriate home-host coordination on execution of the global resolution strategy that has been vetted in the context of the relevant Crisis Management Group or other cross-border coordination forum and ultimately recognized by the SRB as the preferred treatment in resolution for such hosted entities.
Finally, in light of recent cyberattacks on financial institutions both within and outside the EU, and a notable recent cybersecurity breach reported by a U.S. bank regulatory agency,[6] we are deeply concerned about the potential cybersecurity and data privacy-related risks raised by the proposed DRR requirement.
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[1] The Bank Policy Institute is a nonpartisan public policy, research, and advocacy group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.
[2] Single Resolution Board, Expectations on Valuation Capabilities (Apr. 2025) [hereinafter EoVC].
[3] The VDI details the minimum information that In-Scope Entities would be expected to submit into the Data Repository for Resolution and addresses 10 subject areas: (1) the SRB Valuation Data Set; (2) general information (e.g., organizational structure, business strategy, etc.); (3) financial information; (4) tax information; (5) personnel; (6) IT and operations; (7) risk management; (8) legal and compliance; (9) internal valuation models; and (10) other information as may be requested by the Internal Resolution Team. EoVC, at 21–22.
[4] The playbooks must describe, at a minimum, the following: (1) the applicable methodologies and models used by In-Scope Entities to value their assets and liabilities; (2) the potential use by the independent valuer of internal valuation capabilities; (3) the governance arrangements applicable to valuation-related data and models in both business as usual conditions and in the event of resolution; and (4) the processes and timelines for producing the Valuation Data Set, collecting information for the VDI and managing the DRR, including any corresponding quality- assurance and sign-off procedures. EoVC, at 63.
[5] The FSB has noted that an effective resolution regime requires firms to be able to demonstrate, as part of the recovery and resolution planning process, capabilities to quickly and accurately produce and make available to relevant authorities the essential information needed to implement such plans. However, an effective resolution regime does not require preemptive production of such information on an ongoing periodic basis. See, e.g., Financial Stability Board, Key Attributes of Effective Resolution Regimes for Financial Institutions at 19, 38 (Apr. 2024), available at https://www.fsb.org/uploads/P250424-3.pdf; Financial Stability Board, Principles on Bail-in Execution at 12–13 (June 21, 2018), available at https://www.fsb.org/uploads/P210618-1.pdf.
[6] Under 12 U.S.C. § 1821(d)(15), the FDIC is required to “maintain a full accounting of each conservatorship and receivership” and “with respect to each conservatorship or receivership to which the Corporation was appointed, the Corporation shall make an annual accounting or report, as appropriate.” The statute further requires that, “any report prepared… shall be made available by the Corporation upon request to…any other member of the public” (emphasis added).
