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Yorkshire Building Society

The Society has no objection to any component, apart from the leverage ratio.
YBS disagrees here, and the Society suggests that the text should say “adjust” not “increase”. There may well be circumstances where a reduction is appropriate (e.g. due to national gold plating under Pillar 2). The drafting should also make clearer that the imposition of a higher amount should be exceptional, not routine.
The Society would question whether this is in fact susceptible to benchmarking. The CP established a very important point in the second paragraph on page 9, illustrated very clearly in the Box 1 diagram on page 11, to be given effect in Article 3.2 : if the resolvability assessment concludes that liquidation under normal insolvency processes is feasible, and no alternative preferred resolution strategy is identified, the re-capitalisation amount shall be zero. YBS would support this. BRRD Article 32.1 (c ) establishes a high public interest threshold for the use of formal resolution tools rather than insolvency procedures, and this must be respected. YBS suggests that attention is drawn to this by a further Recital to underline the point in the context of MRELs.
The Society would submit to exclude the leverage ratio, for reasons given above. Also exclude the combined buffer, as that is not a minimum requirement, but a buffer. In terms of the Financial Stability Board, the TLAC approach excludes buffer.
This is not relevant to building societies. However, BRRD does not envisage recapitalisation to full ex-ante status.
YBS would support this approach.
YBS agrees with this proposal.
YBS opposes this, and would suggest six years in its place. The early part of that period will overlap with the build up to Basel 3 end point, so not sensible to concentrate demands to issue risk-bearing instruments for several purposes in that narrow window, otherwise market capacity may be insufficient.
The Society agrees with this proposal.
The Society feels the correct balance has broadly been struck.
YBS does not have anything additional to add.
Henri Murison
+44 1274 473521