 You're welcome to the IAEA for this presentation from Dr. Elke Kinnick, the Chair of the Senior Resolution Board. She is here with colleagues in training, Dummy Ebrichs, who are probably on the board, and I'm sure that they will both answer questions at the end of the presentation. The SRB are Europe's ranking firefighters. If you don't want ever to meet them, you hope that they're there and ready at all times, but in the event that you do need them, you want them to be swiftly available and on your side. But they're not just firefighters. They also set requirements for fire proofing and for fire planning. Their real job, if you like, is to try to ensure that all the buildings are ready for the fire. And differently, look to a firefighter in the event of a fire. If your bank is on fire, they don't immediately set about rescuing it. They decide first whether it needs to be rescued. So this is quite a different feature of the work. Dr. Kinnick is a professional accountant who came to her current role, first of all through the currency industry, then through the insurance industry. She was then on the professional accounting standards board, and then became the President of the German Banking Regulator and the Supervisor in Bracken. I think that it was she who was brought in to put an end to like-touch regulation in 2012. But as the Banking Union became a key priority for Europe, it was inevitable, I suppose, that Dr. Kinnick would be asked to engage with that process. And she was brought on board as the Chief Executive, or rather as the Chair of the same resolution board in 2015. And since then, she and her colleagues have done an excellent job of meeting what is in fact an impossible mandate. Which would be ready on day one for a fire that might happen on day two. Thankfully there have not been too many fires, and those that have passed relatively recently. So perhaps I would like to... I think I'll move over. It's making it a bit easier. At least then I see also, from my side, the rattling. Let me perhaps build here a little thank you for the invitation. It's always a pleasure to come to Ireland. I think I've got basically the idea that I should go to each and every member state once per year, and at the same time I thought I should take only one country per month, and then you know the answer on education. But let me jump on something you said, and Kevin, you know the SMB very well, because you were responsible for the first performance audit of this organization, and you were very fair with an organization that was still in set up. I was used to the concept of first set up, then you were performance audit. We did it in parallel, so we used some of your comments actually to set it up. But you said just firefighters, you don't want to ever meet them. And then I thought, yes, but when I look at some houses, it's very good to meet the firefighter sometimes. Just to talk to them about what you need to improve in your house to make it fireproof. So you mentioned that afterwards, so at that point I think you like to meet the firefighter too. But with that, let me try to give you a bit of an overview where we are. I think it's fair to say for Ireland, like for many other countries, that we have a good reason now to look backwards, because it's one decade since the collapse of Lehman Brothers in the US, or it's 10 years after the financial crisis severely hit the number of member states. For some it came by far later than they thought in the presence of someone else. But countries like Ireland that were barely hit by the crisis, and then also made a very strong recovery. So I think Ireland is to that extent, for me, the example that shows that fast and decisive reaction to the problem helps to overcome it. Denial or snails-based approaches don't solve a problem they make, they're just a bit more expensive over time. So let me try to give you a bit of an overview of what, while the lessons taken, what are some of them, not to the causes of the crisis, but what hit the crisis, we gave and then given you a bit of an answer to where we stand today and what are the topics that are still on the agenda. Well, if you cast your mind back, I think 10 years ago everyone got the feeling the sun is shining, liquidity is ample, light touch regulation is the way to go, any rule you abandon is a good rule. So then we saw with the crisis that this idea of light touch regulation just did hide some of the mistakes and what I think was most importantly, what we also saw is something that I think is deducted to Keynes, to say markets can stand longer irrational than they can stay liquid. So what it basically means is this global belief of an always rational market of ever lasting liquidity just faded away or faded was probably a reality. What did it mean in the result? It meant that governments took the very tough decision to bail out banks in lack of alternative. I don't think that any government did it rightly because they thought this is the greatest thing they ever do, was to pay its money, it was just done because the alternative in solvency of banks was so untested that people did not want to go that route. So what did it mean in the result? At least in my country for I think the same year was that everyone agreed at the end never ever should bail out be the answer. We need to find a view, we need to find a system that works because otherwise it is basically turning market economy upside down, meaning that profits are private and when it comes to risk and losses they are public for the taxpayer. So what did we do or what was then the result? In international terms it was the financial stability board. This was when I met first when we were discussing a resolution framework and let's be fair ten years ago resolution was only known as a New Year's resolution and now most people might be more disciplined than I am. My New Year's resolution only lasts until any January, which is that my first day then I renew some of those ideas and then February we get rational and we move on to what it was always. Now resolution as a framework for bank is totally new, not just for Europe but for everyone. Also the FDIC, the Americans did not have a resolution framework. They had a very functioning deposit insurance system within the FDIC but not a real resolution framework. So the FSB worked on this and the European Union was very forced to work on it too. It's called BRID in Europe and then what we realized is we needed more for the European, for the Euro area because having one currency fits even more together. So this is the banking union, creation of the banking union, single supervisory mechanism in place since 2014, single activities since 2014, single resolution mechanism put in place in 2015, active since 1st of January 2016 and we are still waiting for the third pillar called the European deposit guarantees team where I think the wording in Brussels for the time being is it will come but for the moment it's on life support by Zinkoma or some people say we need to push forward because we need the three pillars in the end. The first pillar SSM, very simple is the harmonized supervision under the roof of the European central bank, indirect supervision for the largest banks, indirect so coordinating the level playing field for what is called ASI, less significant institutions. Keep in mind sometimes they can be very troublesome. The second pillar, single resolution mechanism, single resolution board is the one I will now talk a bit about. Single resolution mechanism means that we work together the national resolution authorities in the member states, so here central bank of Ireland together with the body in Brussels and I'm always saying we need to work together because clearly in 19 different member states with a lot of non-harmonized law we need to have a balance between national expertise and a harmonized European perspective. So what are we working on? I think Kevin has already given a nice example. We are actually a bit like firefighters. On one hand we are there to decide to work if a fire hits a building, we need to decide is this fire hitting the building, so the bank is the building, is the bank important enough to go to resolution or should prevail what happens in any other economy if you don't succeed in the market, well then you don't succeed and you exit the market and that's be fair, we don't have banks exiting the market. This can also create more than just a small problem. So basically the single resolution board is there to decide upon the need for a resolution and if there's a need for the resolution it's called a public interest assessment then to deal with the resolution of this bank. Also again in coordination but decided by the single resolution board but in coordination with the national authorities in those countries where this bank is active. But our major work and I think this is where we have our really working on resolution is hopefully always the exception is resolution planning and again as Kevin said you can compare it easily to fire safety planning. What does it mean? We want to ensure that banks are resolvable. When we talk about banks being resolvable the first decision you might have to take is to decide what if this bank gets into trouble what would be your expected answer? Is the bank so important, so interlinked has critical functions so that you will need an administrative procedure called resolution to solve this problem or is it a bank where you would say well it's one out of ten banks in this region it's one out of there is an easy replacement there is no interconnectedness where you would then say well in that case insolvency is the logical consequence if this bank gets into trouble. So this is more the basic first question the second then is consider that we are now talking about the largest bank per member state where you would always assume that they are so important that you prepare at least for resolution the decision about resolution yes or no is always a point in time decision at the moment of failing of this bank but for these banks what does it actually mean resolution preparing for resolution I will put it under two pillars we have learned through the process that resolution means that you need to find an answer how to get this business up and running again on Monday morning for that you need means which means you need to be able to write down equity you need to be able to write down liabilities convert liabilities into equities all these are tools we have at hand you can call them and I'm just going for this one two you can call it an open bank bail in and then to be able to have a solvent bank opening on Monday morning now this doesn't work without money and the money is called in international terms T-LAC in European terms MRA we are working on that we took the first binding decisions on MRA for the largest groups last year we are now this year taking binding MRA decisions for nearly all the banks under our remit there's also an exception to rules and we are refining those decisions for the largest banks and those are the banks that are active in a number of member states even outside the banking union where we are now already in a second week Dominic has always said it's a journey I would say to be precise it's a marathon it's not just a nice journey till next week but we are working on step by step improving MRA improving the quality with that quality of capital which means talking this year about subordination talking about location of MRA it's a long topic but MRA is needed it's indispensable but it's not the entire answer because the second part of the answer is well is the bank really resolvable from an operational point of view it starts with do you have the needed data it's easy to say we will bade in creditors and then you scratch your head and say but who is it do you know the numbers do you know who is this so it's data availability liabilities but not just liabilities and you need to have them available on the spot I think we all know I knew it from my times as a CFO there's never a good time to start a giant ICT project it's always too expensive so this is needed no doubt the second part is not just data it's also really to define what are the critical factors you must preserve or not can you separate I think some of us have an interesting memory of have memories which we don't want to repeat in saying how do you separate from a very complex organization over the weekend so how do you define that you have ongoing access to market infrastructure and the like so it's quite a number of topics on top comes for some things what is your legal form think about a cooperative bank if you bade in creditors are you changing the legal form how can you do it so we have a lot of topics we are dealing with resolution planning but I think the most important one is actually we are always saying that we are not the project managers inside the bank our teams and we have our team that's covering the Irish banks here is not the one that tells the bank and now you do this and then you do this and then you do this and then it's all done we are addressing a topic and we are then listening to the bank it's for the banks to come up with a solution we are monitoring it we are pushing them and to take the wording we hope also to be able that with this kind of a diet talk we can avoid to do decision not avoid because we are afraid of but avoid because it's a very complex and cumbersome process to do formal decisions on the removal of obstacles to resolution because this would be a formal administrative act then the bank gets time then we get time ideally hope I think it works normally to say we address the topic and banks understand they have to deal with it if they don't do we have the tools at hand to go into a formal decision well it's a bit like I tell you I tell you do it normally you tell it two times and then you get a bit more serious so we can write letters but this is we write letters but we don't want to do administrative procedures so this is what we are working on it will take us well into 2020 I would expect to get this done there's also one thing to be considered when I go to the European Parliament the first question I will get to combat on it is how many decisions have you taken on removal of impediments so far none because we are talking to the banks and have all banks are all banks resolvable today I would say they are better resolvable than they were a year ago but it will take us till 2020 to really have elaborate resolution plans for all banks and there is one more topic most of the big banks have got so-called resolution colleges where we work together with the non-eurosome members now being in Ireland you are fully aware of colleges because your banks have a footprint in the UK or the other way around so that case we have to consult the non-eurosome members of the EU on our resolution plan they have four months time to respond we have to agree on the resolution plan all making perfect sense but making it fairly complicated to get a process that takes you roughly 18 months into one year time frame so that basically I think we will move really naturally because it doesn't work otherwise to not an annual process but a process that takes a bit longer but the basic framework within the regulation is still one resolution plan per years of iterations on the plan it will take a bit longer but I think for that hopefully be sounder so where do we stand beside that at the same time that we are introducing the current legislation the legislator is working on a revision of the current legislation so we have the project called VRID2 I think the French call it the November package still or it's called the risk reduction package when you hear all of this you always need to ask people which part of the piece puzzle they are talking about for us it's the revision of some of the rights of the VRID and the SRMR in particular it's changes to the error requirements strengthening them introducing a pillar 1 to a pillar 2 and the like clearly we would hope for this work to come to an end as soon as possible it looks like a political compromise has been reached last week in the trial so that's good news but it will actually then mean that we have to also introduce it which is part of the reasons while we are moving in steps we want to fully address the current legislation but also not move in the wrong direction compared to what might come in a new regulation I always tell if member states talk about changing something well as long as there is a sign that says I'm not about to drive more than 50 kilometers per hour in town I have to adhere to that sign even if someone talks about 70 so it's not the second part is something we are pushing for because we saw that in recent cases please always keep in mind corporate law takes more anyhow but also insolvency law is not regulated in Europe so when we talk about resolution which is the European regulation and the European framework then we have always to compare our decisions to the outcome of the national insolvency procedure and there for the Bank of Union we have 19 plus because some member states offer options in this field so that we don't have the same outcome per member state and we are clearly saying it doesn't only make our life easier it makes also the life of our Irish colleagues here easier because so far we are talking we need national handbooks to translate a decision in Brussels international decision partially because we have well we have different laws so this is something we are pushing for we cannot see any movement there before the next parliament to come and last but not least we are setting up our and already touched on the European deposit guarantee system that will take longer but we are actually also setting up our single resolution fund financed by the entire operation by the industry and we are in discussion to hopefully finalise the debate at least the political debate around the backstop who provides the backstop under which conditionality backstop meaning the credit line behind our fund so that in case of me what I would say is the last resort to a last resort we have the can draw on me to fund the resolution which then the means have to be by the industry the second part is far away still is liquidity in resolution because even on Monday morning you have now a sovereign bank you have a viable bank hopefully I hope we have done a good job of the weekend but there might not be a long queue in front to put money into the bank but rather a queue that still swings that thing twice so liquidity breaching from resolution into normal operation and liquidity is still a topic and with that just two words that I really keep very quiet there normally on the famous B word I think banking was the most challenged to Ireland 10 years ago was that the B word probably and now the B word is Brexit now we all saw that yesterday the member states agreed on the exit was it an agreement and now we have to see what our British friends are doing I think no reason to be very excited about the entire debate but from the SRV's point of view we have started already early this year to address basically only two topics you could point it down to say as usual is that when the UK becomes a third country for third countries of life but what does it actually mean for those banks in the EU that have over decades funded themselves by issuing bonds using English law they have to realize that with the exit of the UK while remaining on how they finally word rules these issues will become issues by under the law of a third country meaning that they are in principle no longer eligible reason for that that they then have no longer the statutory clause that makes a resolution decision immediately effective towards these bonds so this is something we have warned you can now separate and say well issues before the referendum while the banks did know that this was to come issues since the referendum I hope the banks have started to introduce the needed contractual clauses but in any case we have stated publicly we have stated to the banks that on those banks that have issues under UK law we will have an individual look we might consider that it's something which is anyhow experimented in the year or two so it's not a big deal but what are you dealing with bonds that are perpetual bonds because introducing a clause afterwards is probably the only thing that's not really on the table so it's more a warning to the banks within the banking union not to carry on as they always did the second part is something where in particular here Irish colleagues have been to the forefront and very active banks that now need a new home to passport their business within the banking within the EU in 2017 and here our answer has been very simple we need to ensure that those banks their operations in the EU stay resolvable which means now just to simplify it if you consider that they will have to set up at some point an intermediate holding in the EU then this business is fueled into London then it's fueled into and into which would give us a concern so what we are talking about like the banking that the supervisors is please no empty shelves no that the boxes but operations where when you talk to the risk officer in the banking union he knows what he's talking about or to put it for a bit more more into a picture I read an article by the insolvency administrator of Neiman Germany and one of the explanations he gave was well thought of because they have just finished the insolvency procedures for Neiman Germany which was a limited company in Germany and he said the first 18 months he spent on trying to figure out where the records of Neiman Germany were and to buy them back because with the failure of Neiman part of it became a bar place part of it became a rumor and the banking was within the group of Neiman some way and I think from what I understood and there were some outsourcing partners that still had open bills with Neiman and therefore thought they first paid and then they had over copies of records so and I think we should be today in a position to say if we have a failure we want to know where the records are and how to start and how to solve the problem and not to scratch our head you should never repeat a mistake within 10 years so that's the simple argument let me conclude here as always when you talk to the police or you talk to the firefighters of the life you get really depressed because life is very risky but at the same time I think we all need to acknowledge we have put in place over the last 10 years a lot of compensation we have banks have improved their bounties have addressed MPLs not everywhere to the pace you would love them to do but they have a risk and they are doing it so banks are in a better shape but and we are now tools at hand to hopefully solve problems that 10 years ago we were a bit empty handed so no reason to be depressed and in particular here I would say to some reason to take good lessons from what Ireland did and as I started to say if you address a problem do it fast do it forceful it's easier that's something for Europe as a whole and don't believe that 10 years after now it's all solved and we can go back into old habits and with that someone wrote me up how I should say goodbye but for me Ireland is such a weird combination that the pronunciation in English doesn't make any sense either so thank you for your patience