> Postbus 20201 2500 EE Den Haag The Netherlands

Ms Elke König
Chair
The Single Resolution Board
Treurenberg 22
B-1049 Brussels
Belgium

Financial Markets Policy
Directorate
Korte Voorhout 7
2511 CW Den Haag
Postbus 20201
2500 EE Den Haag
www.rijksoverheid.nl
Our reference
2017-0000019313

Date
6 februari 2017
Subject Ongoing progress in the functioning of the Banking Union

Dear Ms König,
Through this letter I would like to send you my warmest congratulations on your
two year anniversary as Chair of the Single Resolution Board. Since you took
office, major steps have been taken at unprecedented speed. This is therefore an
appropriate moment to take stock of the considerable achievements made and
assess the functioning the Banking Union in view of further contributing to the
soundness of the European banking system. I write to you in my capacity as
Minister of Finance of the Netherlands.
As acknowledged by the Council of Ministers in the roadmap to complete the
Banking Union, your institution is actively contributing to financial stability,
reversing fragmentation, mitigating moral hazard and reducing the risk for the
involvement of public financial means. The roadmap also laid down further steps
that will have to be taken in terms of further reducing risks in the financial sector
as well as on the remaining risk sharing elements of the banking union. While in
the road map a number of new legislative measures have been mentioned, I do
believe there is further possible room for improvement within the existing
regulatory framework. This is why I very much welcome a continuous dialogue in
view of enhancing consistency, predictability and transparency within the Banking
Union.
I strongly appreciate the SRB’s work in creating resolution plans, which may be
implemented if necessary for certain banking groups. I believe that sufficient
access to information - with appropriate safeguards in view of confidentiality - is of
crucial importance for the effectiveness of the work of the SRB. Therefore in a
letter to Ms Danièle Nouy I also raised the question if the current involvement of
the SRB in the Supervisory Board of the ECB, suffices and would be adequate for
future circumstances. It is crucial that the SRB is in all cases able to fulfil its
independent role in the process of triggering the resolution decision. In light of that
it could be considered to invite the SRB as a permanent observer to the
Supervisory Board.

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In view of improving transparency, consistency and predictability, I also believe it
is worthwhile to consider the disclosure of any requirements imposed on banks. In
light of this I welcome any steps that would result in more disclosure of the final
calibration of the minimum requirements for own funds and eligible liabilities
(MREL). Such requirements are currently in the process of being determined, but
future disclosure will facilitate market discipline and investor decisions, also with
regards to adequately informing investors of the risks such instruments carry.

Financial Markets Policy
Directorate
Our reference
2017-0000019313

Even though it might not be the SRB’s task to ensure that investors are aware of
the risks that capital instruments carry, I do think misselling of capital instruments
could be an obstacle to effective resolution in certain circumstances. It is therefore
important that potential cases of mis-sold instruments to (retail) investors are
considered when drafting resolution plans. In some cases banks might need to
come up with credible plans to wind down mis-sold instruments, for instance
through forced buybacks.
Let me once again thank you for your work in contributing to the safety and
soundness of the European banking system. I look forward to exchanging views
with you on these ideas in more detail.
Yours sincerely,

Jeroen Dijsselbloem
Minister of Finance of the Netherlands

CC: Mr Valdis Dombrovskis (Vice-President), Ms Margrethe Vestager
(Commissioner) and Ms Danièle Nouy (Chair of the Supervisory Board)

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