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José Carlos Pardo
José Carlos Pardo

Chief Economist

• Jose Carlos Pardo is graduated in Industrial Engineering at Deusto University (Bilbao) and MA of Financial Information and Systems at Deusto University. Currently, he is the chief economist of Recovery and Resolution Policies in the BBVA Research Department. Previously in the group, he is the executive director of regulatory strategy in the Group Financial Department. In BBVA since 2011. Prior to BBVA, he was Director at KPMG in the Financial Risk Management Department. 

 

• Currently, Jose Carlos Pardo is the head economist of Recovery and Resolution Policies. Responsible for the analysis, designing and internal coordination of the strategy and lobbing actions in terms of recovery and resolution regulation and strategy. . .

 

Latest Publications

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BRRD: Overview of the EBA’s level 2 regulation

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According to the BRRD mandate, the European Banking Authority (EBA) has released more than 35 technical standards and guidelines of a specialized nature and in order to clarify subjects of the BRRD. EBA’s role has been decisive in order to fully implement the BRRD; it has successfully implemented harmonized definitions to be applied by Member States of the EU.

Available in English

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Financial Regulation | Setting in motion the Capital Markets Union

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On Sep 30 the European Commission released an Action Plan on Building a Capital Markets Union, after a public consultation last February. This document provides a more detailed roadmap until 2017 and specific proposals in key areas like securitization and covered bonds. In 2017, the Commission will take stock of the progress and shed more light on the steps until 2019.

Available in English

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EU loss-absorbing capacity requirement: final MREL guidelines

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On 3 July 2015, the EBA published the final technical standard on the criteria for determining the minimum requirement for own funds and eligible liabilities for bail-in – the so-called MREL. With the MREL, European authorities seek to ensure that banks have enough liabilities to absorb losses in case of a bank’s failure. It will enter into force in 2016.

Available in English

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BRRD transposition in Spain: a milestone in implementing an effective resolution regime

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Today it has been published in the BOE the transposition of the Bank Recovery and Resolution Directive (BRRD) in Spain (Ley 11/2015 de recuperación y resolución de entidades de crédito y empresas de servicios de inversión) approved by the Spanish Parliament last 11 June. It will enter into force on 20 June.

Available in English

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Financial Regulation Outlook. May 2015

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This month we focus on: Basel updates progress in Basel III implementation, Europe's Bank Structural Reform, endorsing macroprudential policies, Capital Markets Union, the first six months of European banking supervision, the new resolution tools and liquidity provision and a Digital Single Market strategy for Europe.

Available in English

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Funding in Resolution: the lender of last resort function in the new resolution framework

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In 2014, the resolution discussion was mainly focused on the Total Loss Absorbing Capacity (TLAC). The connection of this framework with the liquidity provision of failed banks has been uncharted territory that the FSB is planning to tackle in 2015. The aim of this paper is to contribute to the discussion on how to ensure liquidity in a resolutions process.

Available in English

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Financial Regulation Outlook. April 2015

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This month we focus on: Basel reviews the standardised approach for credit risk, FSB's financial reform agenda, Mexico’s RCAP Review, the Single Resolution Board’s kick-off, the IMF Financial Stability Report and ECB annual report on supervisory activities.

Available in English

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TLAC QIS: the next milestone in designing the optimal loss-absorbing framework

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In November 2014, the Financial Stability Board (FSB) launched the consultation paper comprising a set of principles and features on the new total loss-absorbing capacity requirement (TLAC). The TLAC proposal has caused much stir in the financial community and has become one of the hottest regulatory concerns. Two weeks ago, on 2 February, the consultation period ended with the financial industry having expressed their positions on TLAC. As the FSB outlined in November, once the public consultation has ended, now is the time for carrying out a comprehensive Quantitative Impact Study (QIS) to define the optimal calibration of the TLAC.

Geographies:Global

Available in English

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MREL and TLAC: What are the consequences of breaching them?

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In November 2014, the FSB and the European authorities published the main features of their new loss-absorbing ratios, TLAC and MREL respectively. Despite having the same purpose, both ratios have significant divergences, which imply heterogeneous consequences and penalties when a bank breaches them.

Geographies:Europe

Available in English

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Compendium on Resolution Strategies: a multiple-point-of-entry view

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Achieving an effective resolution regime to resolve banks quickly, avoiding disturbances to the financial system, minimizing the use of public funds –thus protecting taxpayers–, and continuing the critical financial services that they provide is one of the main goals of authorities in the current regulatory reform. Authorities are developing a new resolution framework that set out the responsibilities and powers to enable them to resolve efficiently cross-border banks in trouble. In this sense, the FSB outlines two polar resolution approaches for resolving global banks: the Single Point of Entry (SPE) and Multiple Point of Entry (MPE) resolution strategies. The purpose of this compendium is to describe the main features of the Multiple Point of Entry resolution scheme

Available in English

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The European MREL: main characteristics and TLAC similarities and differences

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On 28 November 2014, the EBA released the consultation paper on the criteria for determining the minimum requirement for own funds and eligible liabilities for bail-in – the so-called MREL. With the MREL, European authorities will ensure that banks have enough liabilities to absorb losses in case of failure, and, therefore, shareholders and creditors should shoulder much of the recapitalisation burden, instead of tax-payers.

Geographies:

Available in English

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FSB reports on progress in reforming resolution regimens & resolution planning

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On 12 November, the Financial Stability Board (FSB) published a progress report to the G20 on the reform of resolution regimes and resolution planning for GSIBs. The report reviews what has been achieved so far and sets out further steps to fully implement the FSB Key Attributes . The FSB highlights that only a few jurisdictions already comply with all the principles of Key Attributes and that there is still substantial work to be done in the coming months. In that vein, the FSB establishes the following priorities for 2015 to ensure that all G-SIFIs are resolvable: • Finalise the common international standard on total loss absorbing capacity (TLAC) • Achieve the broad adoption of contractual recognition of temporary stays on early termination and cross-default rights in financial contracts and finalise FSB guidance on effective cross-border recognition • Develop further guidance to support resolution planning by home and host authorities, in particular with regard to funding arrangements and operational continuity of core critical services • Promote the full implementation of the FSB’s requirements for resolution regimes and resolution planning beyond the banking sector

Available in English

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Total Loss-Absorbing Capacity (TLAC): making bail-in feasible and credible instead of bail-out

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The new “loss-absorbing capacity” concept and the bail-in tool are the cornerstones of the new resolution regime, in which the shareholders and creditors should shoulder much of the recapitalisation burden. Banks must have enough liabilities with loss-absorbing capacity (TLAC). The FSB envisages that the TLAC should consist of instruments that can be legally, feasibly, effectively and operationally written down or converted into equity in case of resolution, in an amount that doubles the capital and leverage requirements (16% of RWA and 6% of leverage assets). Thus capital instruments and long term unsecured debt are broadly the instruments that may compose it.

Geographies:Global

Available in English

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Operational subsidiarisation in practice under an MPE resolution strategy

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Critical shared services of MPE banks must be organised in a way that would permit the group to maintain critical services when other parts of the group enter into resolution. This is what has been termed as “effective operational subsidiarisation.”

Geographies:Global

Available in English

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New payments and contributions in the institutional context of the Banking Union

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The Banking Union requires financial institutions to support the administrative cost of the new institutions and finance the new resolution fund. Current regulatory debate is focused on how to define a methodology to compute these new payments and charge them to banks. For banks this new reality implies new costs, however even if in the short run the profits of the European banking system may be affected, in the long run the benefits of a robust banking union will clearly overcome the financial costs.

Geographies:Europe

Available in English