## EXECUTIVE SUMMARY

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---

### Introduction
- The Belgium FSAP reviewed arrangements related to the financial safety net and crisis management.
- Progress since the 2018 FSAP includes preparation of resolution plans and Minimum Requirement for own funds and Eligible liabilities (MREL) targets.
- All recommendations in this technical note are addressed to the national authorities.
- References to Significant Institutions (SIs) are made when relevant and allocation of responsibilities between the Belgian authorities, the European Central Bank (ECB) and the Single Resolution Board (SRB) is described.

### Overall findings and focus areas
- Authorities should focus on:
  - strengthening the crisis management framework;
  - ensuring operational readiness of resolution plans; and
  - enhancing the Deposit Insurance System (DIS).
- Some recommendations from the former FSAP were not implemented or only partially implemented, mainly regarding governance arrangements at the National Bank of Belgium (NBB) or related to the DIS.
- Key recommendation areas: recovery planning and early intervention; the resolution framework and crisis management; resolution planning, tools and powers; emergency liquidity assistance; and the DIS.
- The NBB hosts the majority of financial safety net functions; remaining recommendations are addressed to the DIS within the Federal Ministry of Finance (MoF).

### Recovery planning and early intervention
- Most Less Significant Institutions (LSIs) submit simplified recovery plans assessed by the NBB in its supervisory capacity.
- Formal assessment for simplified recovery plans takes place every two years; the NBB should:
  - perform an internal annual assessment to check yearly if any LSI that qualifies for a simplified recovery plan would merit an annual assessment of its recovery plan.
- Early intervention powers:
  - NBB relies on a broad set of early intervention powers that increase gradually.
  - One extraordinary early intervention power allows the NBB to nominate a temporary administrator for a problem bank.
  - NBB should consider having a pool of experienced and suitable candidates to facilitate exercise of this power.

### Resolution framework and crisis management
- Governance and roles:
  - NBB is the designated National Resolution Authority (NRA) in Belgium.
  - NBB Resolution Board is the decision-making body for resolution issues; composition by law:
    - chaired by the NBB Governor;
    - includes representatives from the financial safety net authorities (the NBB, the MoF and the Guarantee Fund);
    - includes other independent members designated by the MoF;
    - the Chair of the Financial Services and Markets Authority (FSMA) is an observer.
  - NBB Resolution Board used for coordination and cooperation across financial safety net functions.
- Recommended actions for the NBB:
  - finalize the Rules of Procedure of the NBB Resolution Board, giving attention to its capacity as a crisis management committee;
  - prepare bilateral cooperation agreements at technical level between the Resolution Unit and the Supervisory and Financial Stability Departments;
  - establish an interdepartmental cooperation mechanism within the NBB at technical level to:
    - strengthen contingency planning and internal crisis coordination;
    - preserve the know-how from past crisis;
    - flexibly reinforce teams dealing with crisis situations at different stages;
    - build technical capacity for other relevant departments to support the Resolution Unit; and
    - swiftly engage with other relevant authorities when needed.

### Resolution planning, resolution tools and powers
- Progress and priorities:
  - Resolution planning has advanced significantly since the last FSAP, including determination of MREL.
  - NBB should ensure capacity to execute SRB decisions for SIs and cross-border LSIs and NBB decisions for domestic LSIs.
  - NBB should finalize the national resolution handbook with attention to capacity and preparedness to deploy resolution tools that are not part of preferred resolution strategies.
- Operationalization priorities:
  - operationalize sale of business tool and maintain flexibility, since banks considered non-systemic a priori can be systemic at point of failure;
  - operationalize the resolution plan for the biggest LSI given its relatively high importance;
  - prepare remaining resolution plans for branches from banks headquartered outside the EU.
- Staffing and tools:
  - NBB should consider increasing staff of the Resolution Unit.
  - Four resolution tools available: bail-in; sale of business (purchase and assumption); temporary bridge bank; asset separation (only in conjunction with other tools).
  - MREL targets have been met for all but one bank.

### Emergency Liquidity Assistance (ELA)
- Mandate and framework:
  - Provisioning of ELA remains the responsibility of the NBB subject to the Eurosystem framework and the ELA agreement; NBB has developed a handbook for assessing and granting ELA.
  - ELA can be provided to solvent financial institutions facing temporary liquidity problems, at a penal rate, with adequate collateral.
  - If ELA envisaged by one or more NCBs for a given institution/group exceeds €500 million, ex ante information to ECB is required.
  - If ELA for a group exceeds €2 billion, non-objection of the ECB Governing Council is required.
- Recommended enhancements:
  - specify lines of action and responsibilities for granting ELA to a bank in resolution, subject to a credible resolution strategy;
  - clarify to which institutions, under what circumstances and subject to what conditions the NBB would consider granting ELA to Nonbank Financial Institutions (NBFIs), given the wide scope of the NBB Organic Law;
  - seek cooperation arrangements with other relevant national central banks (NCBs) to strengthen preparedness, coordination and information sharing in the event of ELA involving a cross-border banking group;
  - introduce a pre-verification framework for ELA collateral and run regular ELA simulation exercises;
  - require banks to periodically list unencumbered assets for possible ELA collateralization;
  - develop internal policies to assess prospective solvency of banks subject to resolution and document roles/responsibilities of relevant NBB departments and the MoF for ELA in resolution.

### Deposit Insurance System (DIS)
- Design and coverage:
  - Belgian DIS is a public DIS funded with ex ante contributions and covers up to 100.000 euros per depositor and credit institution.
  - DIS membership is mandatory and currently comprises 35 banks.
  - Contributions to the DIS are risk based since 2018.
- Fund size, target level, and proposals:
  - Target level remains at 0.8 percent of covered deposits (minimum harmonized level in the EU).
  - The deposit insurance fund reached 1.5 percent of covered deposits at end August 2023.
  - The level of the DIS fund as of end-October 2017 was 1.2 percent.
  - A higher target level of 1.8 percent of covered deposits has been proposed and the Guarantee Fund has worked on incorporating it into draft legislation; the draft law had not been approved at the time of writing.
- Operational readiness and pay-outs:
  - From 1 January 2024, the Belgian DIS is committed to achieving a reimbursement period of seven working days.
  - Ensure operational readiness to meet the target of 7 working days for pay-outs as of 1 January 2024.
  - DIS has improved its internal payment application for automatic pay-outs for the vast majority of depositors.
  - Banks are scheduled to be tested at least every three years by law; testing should be regular and more granular to reflect the 7 working day target.
- Governance, segregation, and investment policy:
  - Guarantee Fund is embedded within the MoF; recommendation to segregate the DIS fund from the national budget.
  - Once segregated, DIS funds should be deposited directly in an account at the NBB in the name of the Guarantee Fund.
  - Develop an investment policy aligned with best international practices; given inflationary context, target highly rated and liquid securities (e.g., sovereign securities).
  - Negotiate repo lines with the NBB and other counterparts for quick liquidity.
  - Minimize concentration risk by holding diversified pool of sovereign debt issued by different EA sovereigns.
  - Expand staffing to manage the DIS Fund investment policy once segregated.
- Paybox plus mandate:
  - Start operationalization of the paybox plus mandate so the DIS fund can be used in resolution when needed and possible.
  - Practical limitations noted: super priority of the DIS fund and restrictive interpretation that limits disbursement gross upfront.

### Selected Main Recommendations (selected items and implementation priorities)
- Recovery planning and early intervention
  1. Perform an internal annual assessment to check yearly if any LSI that qualifies for a simplified recovery plan would merit an annual assessment of its recovery plan (¶15). Priority: M; Timeframe: I; Authority: NBB.
  2. Consider having a pool of experienced and suitable candidates that could be called when needed for the nomination of a temporary administrator in an early intervention context (¶16). Priority: M; Timeframe: NT; Authority: NBB.
- Resolution framework and Crisis management
  3. Finalize the Rules of Procedure of the NBB Resolution Board, giving also attention to its capacity as a crisis management committee (¶21). Priority: H; Timeframe: I; Authority: NBB.
  4. Establish an interdepartmental cooperation mechanism with representatives from relevant departments at technical level for the NBB to: i) strengthen contingency planning and internal crisis coordination; ii) preserve the know-how from past crisis; iii) flexibly reinforce teams dealing with crisis situations at different stages; iv) build technical capacity for other relevant departments to support the Resolution Unit; and v) swiftly engage with other relevant authorities when needed (¶22). Priority: H; Timeframe: I; Authority: NBB.
  5. Prepare bilateral cooperation agreements between: i) the Supervisory Departments and the Resolution Unit; and ii) between the Financial Stability Department and the Resolution Unit (¶24&34). Priority: H; Timeframe: I; Authority: NBB.
  6. Seek cooperation agreements with home authorities of banks headquartered outside the EU, that are deemed to be relevant by the Resolution Authority (¶27). Priority: C; Timeframe: NT; Authority: NBB.
  7. Increase staffing of the Resolution Unit and launch a tender procedure to be able to appoint an independent valuer at short notice (¶28). Priority: M; Timeframe: NT; Authority: NBB.
- Resolution Planning, Resolution tools and powers
  8. Finalize: i) the operationalization of the resolution plans for LSIs; and ii) the pending (simplified) resolution plans for branches from banks headquartered outside the EU (¶31). Priority: H; Timeframe: I; Authority: NBB.
  9. Finalize the national resolution handbook, with attention also to the resolution tools that are not part of the preferred resolution strategies, as well as the resolution powers (¶36). Priority: H; Timeframe: I; Authority: NBB.
  10. Consider having a pool of experienced and suitable candidates that could be called when needed if the Resolution Authority would use the power to nominate a special manager; increase legal protection of special managers (¶39). Priority: M; Timeframe: NT; Authority: NBB.
- Emergency Liquidity Assistance
  11. Seek cooperation arrangements with other relevant NCBs, to strengthen preparedness, coordination and information sharing in the event of ELA involving a cross-border banking group (¶44). Priority: H; Timeframe: NT; Authority: NBB.
  12. Develop policies to assess the prospective solvency of banks subject to resolution action and document the lines of action and responsibility of each actor (Supervisory Department, Resolution Unit and Financial markets Department of the NBB), as well as the eventual engagement with the MoF and supranational bodies in the event of ELA in resolution, subject to a credible resolution strategy (¶45). Priority: H; Timeframe: I; Authority: NBB.
  13. Prepare internal planning and document how the NBB would consider ELA to NBFIs, specifying the types of institution, the circumstances, and the conditions under which it would lend to NBFIs (¶46). Priority: M; Timeframe: NT; Authority: NBB.
- Deposit Insurance System
  14. Formalize in an internal operational document the procedure to swiftly activate, when needed, the credit line from the Treasury to the Guarantee Fund within the MoF (¶49). Priority: H; Timeframe: I; Authority: Guarantee Fund.
  15. Ensure operational readiness to meet the target of 7 working days for pay-outs as of 1 January 2024 (¶51). Priority: H; Timeframe: I; Authority: Guarantee Fund.
  16. Segregate the DIS fund from the national budget and increase its target level. Once segregated, develop an investment policy for the DIS Fund and expand the staffing with the necessary expertise to this end (¶50,52,53). Priority: H; Timeframe: I; Authority: Guarantee Fund.
  17. Start working on the operationalization of the paybox plus mandate (¶55). Priority: H; Timeframe: NT; Authority: Guarantee Fund.

### Progress on key 2018 FSAP recommendations (selected statuses)
- Strengthen the NBB ELA framework: Partly implemented.
- Segregate the Guarantee Fund from government funds: Not implemented (draft bill pending).
- Shorten deposit pay-out period to seven days; establish credit lines: Partly implemented (gradual reduction to seven working days until 31 December 2023; credit line exists but needs operationalization).
- Mandate committee for crisis preparedness and regular CSEs: Partly implemented.
- Flexibly staff the NBB Resolution Unit: Not implemented.
- Train staff on sale of business and bridge bank tools: Implemented.

### Key financial soundness indicators (Belgium, 2018–2022; Percent)
- Regulatory capital to risk-weighted assets: 18.8, 18.8, 20.3, 20.4, 20.1
- Tier 1 capital to risk-weighted assets: 16.5, 16.6, 18.2, 18.8, 18.5
- Common Equity Tier 1 capital to risk-weighted assets: ... ... ... ... 17.3
- Tier 1 capital to assets: 6.3, 6.2, 6.3, 6.2, 6.0
- Nonperforming loans net of provisions to capital: 13.6, 13.2, 13.7, 10.6, 10.6
- Nonperforming loans to total gross loans: 2.3, 2.1, 2.1, 2.0, 1.8
- Provisions to nonperforming loans: 44.0, 42.9, 41.1, 45.0, 44.1
- Return on assets: 0.8, 0.8, 0.5, 0.9, 0.8
- Return on equity: 8.2, 8.8, 6.0, 10.0, 9.9
- Interest margin to gross income: 40.4, 39.4, 39.1, 49.7, 50.0
- Noninterest expenses to gross income: 74.7, 74.1, 75.0, 63.4, 63.7
- Liquid assets to total assets: 16.6, 16.4, 21.5, 22.6, 20.2
- Liquid assets to short-term liabilities: 25.0, 23.4, 32.3, 25.2, 22.9
- Liquidity coverage ratio: ... ... ... ... 157.6
- Net stable funding ratio: ... ... ... ... 133.1
- Net open position in foreign exchange to capital: 1.9, 2.1, 2.0, 1.7, 2.4

*INTERNATIONAL MONETARY FUND — BELGIUM: Executive Summary.*

### EXECUTIVE SUMMARY __________________________________________________________________________ 5

### EXECUTIVE SUMMARY

### Introduction
- The Belgium FSAP reviewed arrangements related to the financial safety net and crisis management.
- Progress since the 2018 FSAP includes preparation of resolution plans and Minimum Requirement for own funds and Eligible liabilities (MREL) targets.
- All recommendations in this technical note are addressed to the national authorities.
- The note refers to Significant Institutions (SIs) when relevant and describes allocation of responsibilities between the Belgian authorities, the European Central Bank (ECB) and the Single Resolution Board (SRB).

### Overall findings and focus areas
- The authorities should focus on:
  - strengthening the crisis management framework;
  - ensuring operational readiness of resolution plans; and
  - enhancing the Deposit Insurance System (DIS).
- The current FSAP followed up on recommendations from the former FSAP; some were not implemented or only partially implemented, mainly regarding governance arrangements at the National Bank of Belgium (NBB) or related to the DIS.
- Key areas of recommendations: recovery planning and early intervention; the resolution framework and crisis management; resolution planning, tools and powers; emergency liquidity assistance; and the DIS.
- The NBB hosts the majority of financial safety net functions; remaining recommendations are addressed to the DIS within the Federal Ministry of Finance (MoF).

### Recovery planning and early intervention
- Most Less Significant Institutions (LSIs) submit simplified recovery plans assessed by the NBB in its supervisory capacity.
- Formal assessment for simplified recovery plans takes place every two years; the NBB should:
  - perform an internal annual assessment to check yearly if any LSI that qualifies for a simplified recovery plan would merit an annual assessment of its recovery plan.
- Early intervention: the NBB relies on a broad set of early intervention powers that increase gradually.
  - One extraordinary early intervention power allows the NBB to nominate a temporary administrator for a problem bank.
  - The NBB should consider having a pool of experienced and suitable candidates to facilitate exercise of this power.

### Resolution framework and crisis management
- The NBB is the designated National Resolution Authority (NRA) in Belgium.
- Within the NBB, the NBB Resolution Board is the decision-making body for resolution issues; composition is defined by law:
  - chaired by the NBB Governor;
  - includes representatives from the financial safety net authorities (the NBB, the MoF and the Guarantee Fund);
  - includes other independent members designated by the MoF;
  - the Chair of the Financial Services and Markets Authority (FSMA) is an observer.
- The NBB relies on the NBB Resolution Board for coordination and cooperation across financial safety net functions, including the DIS and the MoF.
- Recommended actions for the NBB:
  - finalize the Rules of Procedure of the NBB Resolution Board, giving attention to its capacity as a crisis management committee;
  - prepare bilateral cooperation agreements at technical level between the Resolution Unit and the Supervisory and Financial Stability Departments;
  - establish an interdepartmental cooperation mechanism within the NBB at technical level to:
    - strengthen contingency planning and internal crisis coordination;
    - preserve the know-how from past crisis;
    - flexibly reinforce teams dealing with crisis situations at different stages;
    - build technical capacity for other relevant departments to support the Resolution Unit; and
    - swiftly engage with other relevant authorities when needed.

### Resolution planning, resolution tools and powers
- Resolution planning has advanced significantly since the last FSAP, including determination of MREL.
- The NBB should ensure capacity to execute:
  - SRB decisions for Significant Institutions (SIs) and cross-border LSIs; and
  - NBB decisions for domestic LSIs.
- The NBB should finalize the national resolution handbook with attention to capacity and preparedness to deploy resolution tools that are not part of preferred resolution strategies.
- Operationalization priorities:
  - operationalize sale of business tool and maintain flexibility, since banks considered non-systemic a priori can be systemic at point of failure;
  - operationalize the resolution plan for the biggest LSI given its relatively high importance;
  - prepare remaining resolution plans for branches from banks headquartered outside the EU.
- The NBB should consider increasing staff of the Resolution Unit.

### Emergency Liquidity Assistance (ELA)
- Provisioning of ELA remains the responsibility of the NBB subject to the Eurosystem framework and the ELA agreement; the NBB has developed a handbook for assessing and granting ELA.
- Recommended enhancements:
  - specify lines of action and responsibilities for granting ELA to a bank in resolution, subject to a credible resolution strategy;
  - clarify to which institutions, under what circumstances and subject to what conditions the NBB would consider granting ELA to Nonbank Financial Institutions (NBFIs), given the wide scope of the NBB Organic Law;
  - seek cooperation arrangements with other relevant national central banks (NCBs) to strengthen preparedness, coordination and information sharing in the event of ELA involving a cross-border banking group.

### Deposit Insurance System (DIS)
- Outstanding improvements:
  - increase the target level of the DIS fund;
  - segregate the DIS fund from the national budget, since monies are collected ex ante from banks;
  - once segregated, develop an investment policy aligned with best international practices as a matter of priority.
- The public backstop (MoF credit line to the DIS fund if ex-ante contributions are exhausted) needs further development into an internal policy document to be fully operational when needed.
- Operational readiness obligations:
  - ensure operational readiness to meet the target of 7 working days for pay-outs as of 1 January 2024.
  - start working on operationalization of the paybox plus mandate.
  - expand staffing with necessary expertise to manage the DIS Fund investment policy once segregated.

### Table: Main Recommendations—The Financial Safety Net and Crisis Management (selected items)
- Recovery planning and early intervention
  1. Perform an internal annual assessment to check yearly if any LSI that qualifies for a simplified recovery plan would merit an annual assessment of its recovery plan (¶15). Priority: M; Timeframe: I; Authority: NBB.
  2. Consider having a pool of experienced and suitable candidates that could be called when needed for the nomination of a temporary administrator in an early intervention context (¶16). Priority: M; Timeframe: NT; Authority: NBB.
- Resolution framework and Crisis management
  3. Finalize the Rules of Procedure of the NBB Resolution Board, giving also attention to its capacity as a crisis management committee (¶21). Priority: H; Timeframe: I; Authority: NBB.
  4. Establish an interdepartmental cooperation mechanism with representatives from relevant departments at technical level for the NBB to: i) strengthen contingency planning and internal crisis coordination; ii) preserve the know-how from past crisis; iii) flexibly reinforce teams dealing with crisis situations at different stages; iv) build technical capacity for other relevant departments to support the Resolution Unit; and v) swiftly engage with other relevant authorities when needed (¶22). Priority: H; Timeframe: I; Authority: NBB.
  5. Prepare bilateral cooperation agreements between: i) the Supervisory Departments and the Resolution Unit to ensure a continuum between early intervention and resolution when dealing with problem banks and that, in case of liquidation, the resolution unit can inform the opinion that the supervisor sends to the Insolvency Court on the nomination of the liquidator(s); and ii) between the Financial Stability Department and the Resolution Unit to increase resolution preparedness for potential situations in the Belgian financial system that could end up leading to the resolution of individual banks (¶24&34). Priority: H; Timeframe: I; Authority: NBB.
  6. Seek cooperation agreements with home authorities of banks headquartered outside the EU, that are deemed to be relevant by the Resolution Authority (¶27). Priority: C; Timeframe: NT; Authority: NBB.
  7. Increase staffing of the Resolution Unit and launch a tender procedure to be able to appoint an independent valuer at short notice to perform the valuations required in resolution cases (¶28). Priority: M; Timeframe: NT; Authority: NBB.
- Resolution Planning, Resolution tools and powers
  8. Finalize: i) the operationalization of the resolution plans for LSIs; and ii) the pending (simplified) resolution plans for branches from banks headquartered outside the EU (¶31). Priority: H; Timeframe: I; Authority: NBB.
  9. Finalize the national resolution handbook, with attention also to the resolution tools that are not part of the preferred resolution strategies, as well as the resolution powers (¶36). Priority: H; Timeframe: I; Authority: NBB.
  10. Consider having a pool of experienced and suitable candidates that could be called when needed if the Resolution Authority would use the power to nominate a special manager. Relatedly, increase legal protection of special managers, so they have the same level of protection as temporary administrators nominated by the supervisory authority in the context of early intervention (¶39). Priority: M; Timeframe: NT; Authority: NBB.
- Emergency Liquidity Assistance
  11. Seek cooperation arrangements with other relevant NCBs, to strengthen preparedness, coordination and information sharing in the event of ELA involving a cross-border banking group (¶44). Priority: H; Timeframe: NT; Authority: NBB.
  12. Develop policies to assess the prospective solvency of banks subject to resolution action and document the lines of action and responsibility of each actor (Supervisory Department, Resolution Unit and Financial markets Department of the NBB), as well as the eventual engagement with the MoF and supranational bodies in the event of ELA in resolution, subject to a credible resolution strategy (¶45). Priority: H; Timeframe: I; Authority: NBB.
  13. Prepare internal planning and document how the NBB would consider ELA to NBFIs, specifying the types of institution, the circumstances, and the conditions under which it would lend to NBFIs (¶46). Priority: M; Timeframe: NT; Authority: NBB.
- Deposit Insurance System
  14. Formalize in an internal operational document the procedure to swiftly activate, when needed, the credit line from the Treasury to the Guarantee Fund within the MoF (¶49). Priority: H; Timeframe: I; Authority: Guarantee Fund.
  15. Ensure operational readiness to meet the target of 7 working days for pay-outs as of 1 January 2024 (¶51). Priority: H; Timeframe: I; Authority: Guarantee Fund.
  16. Segregate the DIS fund from the national budget and increase its target level. Once segregated, develop an investment policy for the DIS Fund and expand the staffing with the necessary expertise to this end (¶50,52,53). Priority: H; Timeframe: I; Authority: Guarantee Fund.
  17. Start working on the operationalization of the paybox plus mandate (¶55). Priority: H; Timeframe: NT; Authority: Guarantee Fund.

*INTERNATIONAL MONETARY FUND — BELGIUM: Executive Summary.*

### INTRODUCTION

### INTRODUCTION

### Scope and Institutional Framework
- This workstream constitutes the so called third pillar of the FSAP and was dedicated to the assessment of the Financial Safety Net and the crisis management framework in Belgium.
- The Technical note was drafted in the first quarter of 2023, when a visit to Brussels took place, and has been updated subsequently, with virtual meetings held, when necessary, to take note of relevant developments until the approval of the FSAP by the IMF Board on 6 December 2023.
- The scope of this technical note encompasses all the aspects of Belgium’s financial safety net and crisis management arrangements, focused on the banking sector. Main aspects covered and assessed:
  - i) the resolution framework and crisis management;
  - ii) recovery planning and supervisory early intervention;
  - iii) resolution planning, resolution tools and powers;
  - iv) emergency liquidity assistance (ELA); and
  - v) the Deposit Insurance System (DIS).
- The note draws on analysis of legislation and policy documents, the authorities detailed responses to a questionnaire, and discussions with the authorities and market participants during the FSAP mission.
- The note references international standards—particularly the Financial Stability Board Key Attributes of Effective Resolution Regimes for Financial Institutions (FSB KA) and the International Association of Deposit Insurers Core Principles for Effective Deposit Insurance Systems (IADI CP)—but does not constitute a detailed assessment of compliance with these standards.
- Consistent with the assessment methodologies, the FSAP did not have access to confidential firm-specific recovery and resolution plans, and the FSAP made no judgment on individual firms’ resolvability.

### Banking Union and Division of Responsibilities
- Belgium belongs to the Banking Union; responsibilities for the financial safety net are shared between the European Central Bank (ECB), the Single Resolution Board (SRB) and the national authorities.
- Belgium is one of the 21 EU countries that is currently part of the Banking Union.
- The Banking Union is composed of all the EU countries that belong to the EA, and is also open to any other non-euro EU Member State subject to the establishment of a close cooperation framework with the ECB.
- The Banking Union status:
  - The first two pillars (supervision and resolution) are fully operational.
  - No progress has been recorded on the so called ‘third pillar’ related to a common DIS; deposit insurance remains under the national remit.
- Emergency Liquidity Assistance (ELA) is the responsibility of each National Central Bank (NCB) within the Eurosystem as it falls outside the monetary policy framework. The rules and procedures for the provision of ELA are laid down in the ELA agreement, which sets out the ECB’s Governing Council’s non-objection role in the provision of ELA by NCBs, in particular when assessing whether it would interfere with the objectives and tasks of the European System of Central Banks.
- The Euro Area composition note as presented:
  - The Euro Area is composed of 20 EU countries since the adhesion of Croatia in 2023. These countries are: Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain. In addition, currently Bulgaria is a non-euro EU Country that has established a close cooperation framework with the ECB.

### Supervision, Resolution, and National Arrangements
- Distinction by significance of banks:
  - Significant Institutions (SIs) and Less Significant Institutions (LSIs) are distinguished according to their systemic importance.
  - The Single Supervisory Mechanism (SSM) is composed of the ECB Banking Supervision and the National Competent Authorities (NCAs) of the EU countries that belong to the Banking Union.
  - SIs are supervised by the SSM; LSIs fall under the direct responsibility of the NCAs (subject to the oversight of the ECB).
- Single Resolution Mechanism (SRM) composition and responsibilities:
  - SRM is composed of the Single Resolution Board (SRB) and the National Resolution Authorities (NRAs).
  - Resolution planning and decision-making in case of bank resolution is the responsibility of the SRB for SIs and also for cross-border LSIs, whereas domestic LSIs fall under the remit of each NRA.
  - SRB meeting modalities:
    - Executive Session — two modalities:
      - Restricted composition: the Chair and the four Board members meet together with the vice-chair, with the vice-chair lacking voting rights unless (s)he acts in the absence of the Chair.
      - Extended composition: when it deliberates about a specific bank, the relevant NRAs are also represented.
    - Plenary Session: composed of all the members of the restricted Executive Session plus one representative from each NRA.
    - The EC and the ECB have a permanent observer status in all meetings of the SRB.
- National roles in Belgium:
  - The NBB hosts the majority of the functions of the Financial Safety Net.
  - The NBB is the national supervisor, national resolution authority and Lender of Last Resort (LOLR).
  - Deposit insurance is provided by the Guarantee Fund, which is embedded within the Ministry of Finance.
  - The NBB was designated as the NRA in Belgium in April 2014 and subsequently established the NBB Resolution Board to adopt any decision relating to the powers conferred to the NBB as the Resolution Authority in Belgium.
  - The NBB Resolution Board also serves to enable coordination and information sharing in crisis situations between all the functions of the Financial Safety Net.
  - In exceptional circumstances that would require public support, the NBB would need to coordinate closely with the Federal Ministry of Finance (MoF). The Chair of the Management Committee of the MoF is also a member of the NBB Resolution Board.
- Coordination with EA and EU authorities is required to ensure adequate functioning of the Financial Safety Net.

### Key Findings and Focus of Recommendations
- The Technical Note focuses on national arrangements regarding the financial safety net and crisis management framework in Belgium.
- All recommendations are addressed to the relevant national authorities.
- The Belgium FSAP will inform the upcoming EA FSAP of findings relevant at the EA level.
- Box 1 (referenced) highlights the main findings of the 2018 EA FSAP in the field of the Financial Safety Net and Crisis Management; the recommendations from 2018 remain largely valid today.

*Source: INTRODUCTION (Technical Note), 1belea2023008.*

### Box 1. Main Findings of the 2018 Euro Area FSAP on the Financial Safety Net and Crisis

### Box 1. Main Findings of the 2018 Euro Area FSAP on the Financial Safety Net and Crisis Management

### Euro Area FSAP core findings and recommended flexibilities
- The 2018 Euro Area FSAP concluded the EA bank resolution and crisis management arrangements had been strengthened but required further work to complete and unify the regime to enhance effectiveness and feasibility, while addressing transitional and structural challenges.
- Deposit insurance system (DIS)
  - Many national DISs are underfunded and lack effective backup funding.
  - A common deposit insurance system for the Euro Area is missing.
  - Greater risk pooling would help avoid disruptions that may overwhelm countries’ individual capacities and would help address hosts’ risk-sharing concerns.
- Financial-stability exemption
  - The Single Resolution Mechanism Regulation (SRMR) requires bailing in a minimum of 8 percent of total liabilities and own funds prior to access to the Single Resolution Fund (SRF) or national public funds for loss absorption.
  - The minimum 8 percent bail-in is also required to access national DIS Funds and government financial support.
  - Building loss-absorbing and recapitalization capacity beyond capital requirements will take time and is generally not required for smaller banks expected to be liquidated, meaning many banks may have no access to funds even in a system-wide crisis.
  - A financial-stability exception—restricted to Euro Area-wide or country-wide crises, subject to strict conditions and governance—would bring flexibility; this exception should also apply to the 5 percent cap on using the SRF.
- Fragmentation and national heterogeneity
  - Despite SSM and SRM, fragmentation along national lines persists due to heterogeneous national insolvency regimes, diverging national supervisory powers and securities regulation practices, national discretions in directives, and SRB decisions executed by national resolution authorities under diverging national laws.
  - Heterogeneous national insolvency regimes with more generous public-funding options and less stringent loss-sharing under EU state aid rules than in the SRM deliver substantially different outcomes for bank creditors and incentivize national solutions.
- Use of existing powers and tools
  - Many banking union countries have not availed themselves of essential powers available under EU directives (e.g., public equity support and temporary public ownership, authorization to use deposit insurance funds in liquidation proceedings).
  - Belgium had transposed these powers into national legislation.
- Administrative bank liquidation tool
  - Recommendation for a more unified resolution framework for small and large banks to include an administrative bank liquidation tool, allowing the National Resolution Authority (NRA) to appoint a liquidator and commence proceedings irrespective of the public interest test, to reduce destruction of value, level the playing field for creditors, and reduce the risk of EU countries “gaming” the system.

### Belgium — market structure and recent context
- Market concentration and cross-border presence
  - Two Global Systemically Important Banks (G-SIBs) have subsidiaries that are systemic in Belgium; these two banks concentrate almost 40 percent of the Belgian banking assets through their subsidiaries.
  - Including another G-SIB with a branch and a few other foreign banks brings the total share of foreign subsidiaries and branches to almost half of the Belgian banking sector.
  - This highlights reliance on foreign banks and the importance of home-host relations; incomplete aspects of the Banking Union (e.g., lack of burden sharing agreements and national allocation of financial safety net costs) can exacerbate cross-border crisis management challenges.
- LSIs
  - There are 17 LSIs in Belgium which represent 11.6 percent of the Belgian banking assets on a consolidated basis.
  - LSIs are heterogeneous: private banks, retail banks, and other business models. Two largest combine private banking with retail and SME activities.
  - One LSI is an International Credit Securities Depository (ICSD) that holds a banking license and is treated as an LSI due to ECB decision classifying FMIs with banking licenses as LSIs; it does not take deposits from the public.
- Legacy costs and state involvement
  - The public cumulative cost of the Global Financial Crisis (GFC) for the Belgian taxpayer is estimated to be circa €3.8bn as of December 2021 down from €27.5bn at current prices, driven mainly by dividends and reimbursements from banks that received public money during the GFC.
  - Dexia Group, which failed in 2011, remains in winding down; Dexia's balance sheet amounted to €64 billion as of end-2022, compared to €357 billion as of end-2012.
  - The state guarantee provided jointly by Belgium and France was renewed as of 1 January 2022 with a ceiling of €75 billion (formerly €85 billion).
  - Dexia Bank Belgium was bought by the Belgian State in 2012 and continues operating as Belfius, still fully owned by the State.
- Recent distress and system resilience
  - No significant bank distress or failure in Belgium since the 2018 FSAP; in the past five years there have not been any bank failures.
  - Two LSIs required enhanced supervision and early intervention—one voluntarily liquidated and transferred activities to another bank; the other underwent governance remediation.
  - Contagion from recent foreign bank failures (US and Switzerland) has been limited to date; capital and liquidity levels of the Belgian banking sector strengthened following post-GFC reforms.

### Recovery planning and early intervention arrangements
- Responsibilities and processes
  - The SSM and the NBB are responsible for assessing recovery plans: SSM assesses SIs (via Joint Supervisory Teams led by ECB Banking Supervision and supported by NBB); NBB assesses LSIs and informs ECB Banking Supervision of relevant issues.
  - Recovery plans are drafted at group level; Belgian subsidiaries of non-Belgian SIs are not required to draft individual recovery plans.
  - NBB compiled EBA Guidelines on recovery planning in a 2022 NBB Circular Letter; LSIs follow ECB templates.
- Frequency and templates
  - Full recovery plans are approved individually every year for two LSIs; the remainder submit simplified recovery plans reviewed in batch every 2 years.
  - Recommendation: Supervisory Department should perform an internal annual assessment to check if any LSI that qualifies for a simplified recovery plan merits an annual assessment.
- Asset encumbrance indicators
  - Belgian legislation includes two asset encumbrance indicators in the Banking Law to be included in recovery plan monitoring: (available unencumbered assets / preferential deposits) with narrow and broad definitions as set in the Royal Decree of 25 April 2014; NBB issued a 2016 communication to ensure compliance.
- Early intervention powers and use
  - NBB can impose ordinary measures for likely breaches within 12 months (e.g., increase disclosure, stricter capital/liquidity requirements, limit dividends, activate recovery plans) and extraordinary measures including appointment of a special commissioner or temporary administrators; NBB can withdraw banking licenses in coordination with ECB.
  - NBB should consider maintaining a pool of experienced candidates for temporary administrators.
  - NBB used early intervention in two LSI cases in the past five years (one voluntary winding down with no public cost; one remediation plan for governance/internal control deficiencies).
  - ECB Banking Supervision and NBB maintain enhanced cooperation for intensified oversight of LSIs and ad hoc groups for systemic situations (e.g., Covid-19).

### Resolution framework, governance, and preparedness
- Resolution Authority and Resolution Board composition
  - NBB is the designated Resolution Authority in Belgium; NBB Resolution Board comprises 12 members (Governor as Chair, Vice-governor, Director responsible for resolution, Director responsible for prudential bank supervision, Director responsible for prudential policy and financial stability, President of the Management Committee of the MoF, Head of the Guarantee Fund as Head of the National Resolution Fund, four independent members designated by the MoF, and a Magistrate designated by the MoF). FSMA Chair attends as observer without voting rights.
  - Note: Currently the Vice-governor also holds the director role for prudential policy and financial stability, so only 11 members currently; quorum is half of members and decisions by simple majority; Governor holds casting vote in case of draw.
  - Recommendation: composition could be more balanced; consider nominating some independent members upon proposal from the NBB.
- Role as Crisis Management Committee and internal coordination
  - Resolution Board acts as Crisis Management Committee bringing together NBB, MoF, and Guarantee Fund; holds four ordinary meetings per year and can convene extraordinary or emergency meetings.
  - NBB should finalize Rules of Procedure and consider extending scope to cases not immediately involving bank resolution.
  - Recommendation: NBB should establish an internal interdepartmental cooperation mechanism to strengthen crisis preparedness and management, preserve know-how, flexibly reinforce teams, build technical capacity to support Resolution Unit, and swiftly engage other authorities.
- Operational independence and cooperation agreements
  - Supervisory and resolution functions are hosted by NBB and operationally independent with different reporting lines; Resolution Unit separate from banking supervision.
  - Recommendation: prepare cooperation agreements between Supervisory Departments and Resolution Unit, and between Resolution Unit and Financial Stability Department, specifying operational modalities and early notification triggers.
- Testing and international cooperation
  - Resolution framework in Belgium remains untested in practice; NBB has participated in a Crisis Simulation Exercise (CSE) organized by the SRB and conducted a table-top exercise; recommended to continue running exercises regularly.
  - NBB participates in several resolution colleges as observer for SIs and organizes one for an LSI; recommendation: seek cooperation agreements with resolution authorities outside the EU for banks headquartered outside the EU.

### Resolution planning, tools, MREL, and operationalization
- Division of responsibilities
  - Resolution planning and application of tools is shared between SRB (SIs and cross-border LSIs) and NBB (domestic LSIs); SRB relies on Internal Resolution Teams (IRTs); NBB participates in 10 IRTs.
  - In resolution, NBB decides and executes strategy for domestic LSIs and executes SRB decisions for SIs and cross-border LSIs; SRB oversees NBB decisions/measures for domestic LSIs.
- Resolution strategies and readiness
  - Resolution planning for SIs relies mostly on a Single Point of Entry (SPE) approach, but operationalization may be challenging—real cases may require adapting between SPE and Multiple Point of Entry approaches.
  - Resolution planning for domestic LSIs has advanced with two annual cycles completed; for the third cycle all but one LSI resolution plans have been formally approved by the NBB Resolution Board including formal decisions on MREL.
  - NBB intends to comply with SRB defined dimensions of bank resolvability by 2024 for all LSIs; recommendation to prioritize operationalization of resolution plan for the ICSD that holds a banking license.
  - Preferred strategy for most LSIs is liquidation under normal insolvency proceedings due to limited systemic relevance ex ante; recommendation to ensure PIA does not have an unduly restrictive interpretation and considers broader systemic risks.
- Insolvency regime
  - Belgium follows a judicial insolvency regime subject to general insolvency law with specificities for banks; Fund advocates for an administrative liquidation regime as stated in the 2018 EA FSAP (but current Belgium FSAP includes no national-level recommendation, noting best dealt with at EU level).
  - Belgian law allows DIS fund to be used for transfers in liquidation; NBB should inform selection of liquidator in normal insolvency proceedings and ensure cooperation agreements foresee NBB Resolution Unit informing NBB Supervisory Department opinion to the Insolvency Court.
- Resolution tools and powers
  - Four resolution tools can be used for Belgian banks: i) bail-in of own funds and liabilities; ii) sale of business (purchase and assumption); iii) temporary bridge bank; iv) asset separation (asset management company) only in conjunction with other tools.
  - Minister of Finance can oppose use of a resolution tool on fiscal or systemic grounds per article 3(6) BRRD transposition; recommendation to limit Minister’s approval to implementation of resolution decisions that have direct fiscal impact only.
  - NBB is developing a national resolution handbook to operationalize tools and strengthen preparedness—advanced on bail-in and national insolvency proceedings; recommendation to continue focusing on other resolution tools and powers.
- MREL status
  - MREL targets have been met for all but one bank.
  - MREL targets can include up to three components: loss absorption amount, recapitalization amount, and a market confidence charge.
  - For domestic LSIs, some have MREL equal to prudential capital requirements (Pillar 1 and Pillar 2); others have an add-on capped to the lowest level between 8 percent of Total Liabilities and Own Funds and the Combined Capital Buffer (CCB).
  - LSIs with a resolution strategy are subject to a full MREL target with three components; most home SIs also have three-component MRELs.
  - Internal MREL for non-Belgian SIs with subsidiaries in Belgium is often internal MREL assumed to be funded by parent; internal MREL of a significant non-Belgian SI subsidiary in Belgium had not been set by SRB at time of writing.
- Resolution powers and safeguards
  - Belgian resolution powers generally align with FSB Key Attributes: convert/write down own funds and eligible liabilities, transfer ownership/assets/liabilities, ensure continuity of essential services, temporarily stay early termination rights, impose short moratorium (pre-resolution or in resolution), dismiss/replace management and appoint a special manager; courts can require compensation under “no creditor worse off” principle but cannot reverse resolution decisions; NBB staff have protections from individual legal liability for good faith resolution decisions.
  - Recommendation: NBB should operationalize power to nominate special manager(s) by building pool of suitable candidates, ensure legal protection for special managers, and be prepared to implement concurrent measures given run risks.
- Public money and conditions
  - Belgian framework allows potential use of public money in exceptional circumstances via government stabilization tools transposed from BRRD for recapitalization or temporary nationalization, only on grounds of safeguarding financial stability in the context of resolution and subject to:
    - EU state aid rules requiring shareholders and junior debtholders fully absorb losses.
    - Own funds and eligible liabilities must have absorbed losses representing at least 8 percent of total liabilities and own funds (requirement criticized in 2018 EA FSAP as lacking flexibility).

### Emergency Liquidity Assistance (ELA)
- NBB responsibilities and constraints
  - Provisioning of ELA is the responsibility of the NBB as an NCB of the Eurosystem and must respect EU and EA regulatory frameworks.
  - ELA can be provided to solvent financial institutions facing temporary liquidity problems, at a penal rate, with adequate collateral, subject to NBB discretion and compliance with Article 123 TFEU prohibition on monetary financing.
  - ELA provisioning must follow the ECB Agreement on ELA of 9 November 2020 (ELA agreement).
- Credit risk, thresholds, and approvals
  - NBB bears credit risk for ELA operations but must inform ECB ex ante and require non-objection for large amounts.
  - If ELA envisaged by one or more NCBs for a given institution/group exceeds €500 million, ex ante information to ECB is required.
  - If ELA for a group exceeds €2 billion, it requires non-objection of the ECB Governing Council subject to ECB Executive Board assessment if risk of interference with single monetary policy exists.
- Preparedness and operational practices
  - NBB developed an ELA Handbook documenting procedures, solvency criteria, collateral valuation, and contractual documentation.
  - NBB developed an Additional Credit Claims (ACC) framework for regular monetary policy operations during COVID-19 (still in place).
  - SLA exists between Financial Markets Department and Supervisory Departments; SLA modified so Financial Markets is informed if a bank’s Supervisory Review and Evaluation Process score is 3 or worse.
  - Recommendations:
    - Introduce a pre-verification framework for ELA collateral and run regular ELA simulation exercises to test banks’ capacity to mobilize credit claims.
    - Require banks to periodically list unencumbered assets for possible ELA collateralization.
    - Seek ex-ante cooperation arrangements with other relevant NCBs for ELA involving cross-border banking groups, including on collateral deployment across legal entities.
    - Develop internal policies to assess prospective solvency of banks subject to resolution and document roles/responsibilities of Supervisory Department, Resolution Unit, Financial Markets Department, MoF, and supranational bodies for ELA in resolution, distinguishing SI vs LSI and cross-border status.
- ELA to Nonbank Financial Intermediaries (NBFIs)
  - NBB Organic Law allows ELA to “other money market or capital market participants”; no precedents exist for ELA to NBFIs in Belgium.
  - Recommendation: prepare internal planning and documentation specifying:
    - which types of regulated and supervised NBFIs (systemically important) could be eligible;
    - under what circumstances ELA to NBFIs would be considered;
    - subject to what conditions to safeguard NBB balance sheet.

### Deposit Insurance System (DIS) and Guarantee Fund
- Institutional placement and governance
  - The Guarantee Fund for financial services (the Guarantee Fund) is embedded within the MoF and is responsible for the Belgian Deposit Insurance System (DIS).
  - Guarantee Fund is a department of the General Administration of the Belgian Treasury; Head of the Guarantee Fund is appointed by the Administrator General of the Treasury and takes part in the Management Committee of the Treasury.
  - Management Committee of the Treasury takes strategic decisions related to the Guarantee Fund and other departments of the Treasury.
  - Importance of ensuring operational independence of the DIS in line with Principle 3 of the IADI Core Principles for Effective Deposit Insurance Systems (IADI CP), particularly Essential Criteria 1 of Principle 3: no governmental interference should compromise operational independence.
- Responsibilities
  - The Guarantee Fund is responsible for the DIS for banks.

*Source: 1belea2023008 - Box 1. Main Findings of the 2018 Euro Area FSAP on the Financial Safety Net and Crisis Management*

### Chapter 2 of the Global Financial Stability Report issued in April 2023 provides more details regarding central bank

### Chapter 2 — Central bank liquidity support, including ELA, to NBFIs (Belgium excerpt)

### Deposit Insurance Scheme (DIS) design and coverage
- The Belgian DIS is a public DIS funded with ex ante contributions from its member banks and covers up to 100.000 euros per depositor and credit institution.
- DIS membership is mandatory and currently comprises 35 banks.
- Contributions to the DIS are risk based since 2018.
- In line with Directive 2014/49/EU (DGSD) the Belgian DIS guarantees up to 100.000 euros per depositor and bank and would also cover high temporary balances.
- The DIS can make use of a credit line from the Belgian Treasury if the DIS fund would be depleted; national legislation foresees that the Guarantee Fund can call a credit line from the Treasury.

### Fund size, target level, and recent evolution
- The target level of the DIS fund remains at 0.8 percent of covered deposits (minimum harmonized level in the EU).
- The deposit insurance fund reached 1.5 percent of covered deposits at end August 2023.
- The level of the DIS fund as of end-October 2017 was 1.2 percent.
- A higher target level of 1.8 percent of covered deposits has been proposed and the Guarantee Fund has worked on incorporating it into draft legislation; the draft law had not been approved at the time of writing.

### Operational readiness and pay-out timing
- Since 1 January 2024, the Belgian DIS is committed to achieving a reimbursement period of seven working days (in line with Essential Criteria 1 of Principle 15 of the IADI CP).
- The DIS has improved its internal payment application to enable automatic pay-outs for the vast majority of depositors.
- Banks are scheduled to be tested at least every three years by law; testing should be performed regularly and with higher granularity, including the number of covered depositors relative to total depositors.
- The next testing should consider the new pay-out period of 7 working days to ensure achievability with all banks.
- The start of the reimbursement process depends on the judiciary branch: the judicial liquidator or curator must provide the DIS with the information of depositors entitled to reimbursement.

### Governance, segregation, and investment policy of the DIS fund
- The Guarantee Fund should segregate the DIS fund from the national budget so monies collected and future contributions are not mixed with the public budget; a draft law to segregate the Guarantee Fund had not been approved at the time of writing.
- Once segregated, the DIS funds should be deposited directly in an account at the NBB in the name of the Guarantee Fund (in line with Essential Criteria 7 of Principle 9 of the IADI CP).
- The Guarantee Fund should develop a sound investment policy to preserve the DIS fund while maintaining liquidity, subject to adequate risk management, internal controls, and disclosure and reporting systems (in line with Essential Criteria 6 of Principle 9 of the IADI CP).
- Given the current inflationary context, investments should be targeted at highly rated and liquid securities (e.g., sovereign securities).
- To ensure quick access to funds, the Guarantee Fund could negotiate repo lines with the NBB and other counterparts to swiftly discount securities when needed.
- To minimize concentration risk and avoid heightening the bank-sovereign nexus, the Guarantee Fund could hold a diversified pool of sovereign debt issued by different EA sovereigns.
- The Guarantee Fund will have to increase its staffing to bring in necessary expertise.
- The general terms of the investment policy could be developed via a Royal Decree, but the details should be adopted independently by the Guarantee Fund.

### Cross-border arrangements and cooperation
- The Guarantee Fund has signed bilateral cooperation agreements with the DISs of Germany and the Netherlands.
- The Guarantee Fund is concurrently a home and host DIS for five EU countries and is a home DIS to another EU country and a host DIS to four other EU countries.
- Where no bilateral agreement exists, the Guarantee Fund relies on the European Forum of Deposit Insurers home-host multilateral agreement for cross-border cooperation.
- The Guarantee Fund recently conducted simulation exercises with DISs from two neighbouring countries.

### Paybox plus mandate and use in resolution
- The DIS fund can contribute to a resolution scheme subject to the conditions laid down in the BRRD (as transposed by Belgian law) and in the SRMR; use of the DIS fund is subject to the least cost principle.
- Practical limitations to DIS contributions to resolution include:
  - the super priority of the DIS fund in the creditor hierarchy (exposed to losses in liquidation only in exceptional cases), and
  - an overly strict interpretation of directives and regulations that does not allow the DIS fund to disburse gross funding upfront in a resolution up to the value of covered deposits, but rather only funding net of potential recoveries in liquidation.
- On 18 April 2023, the European Commission put forward a legislative proposal for the review of the Crisis Management and Deposit Insurance framework that tackles the first limitation mentioned but does not address the second; the proposal aims, among other things, to increase flexibility for use of the DIS fund in the resolution of medium and small sized banks.
- Belgian authorities should start operationalizing the paybox plus mandate so the DIS fund is used in resolution when needed and possible.

### Progress on 2018 FSAP recommendations (selected items)
- Recommendation 3 (Strengthen the NBB ELA framework): Status — Partly implemented. SLAs updated in April 2018 for earlier information sharing; prepositioning of collateral possible; NBB should consider a pre-verification framework for ELA collateral and regular ELA simulation exercises.
- Recommendation 6 (Segregate the Guarantee Fund from government funds): Status — Not implemented. A draft bill is being presented to segregate the Guarantee Fund, but funds have not been segregated; no initiatives taken for the segregation of the National Resolution Fund yet.
- Recommendation 7 (Shorten deposit pay-out period to seven days; establish credit lines): Status — Partly implemented. Belgium reduces repayment period gradually to seven working days (until 31 December 2023); a credit line exists via the Deposit and Consignment Office but needs operationalization.
- Recommendation 8 (Mandate committee for crisis preparedness and regular CSEs): Status — Partly implemented. NBB Resolution Board participated in exercises and oversees national handbooks but has not mandated a committee to proactively oversee national financial crisis preparedness or organize regular CSEs.
- Recommendation 9 (Flexibly staff the NBB Resolution Unit): Status — Not implemented. NBB should develop policies to promptly increase Resolution Unit staffing and draw resources internally and externally.
- Recommendation 10 (Train staff on sale of business and bridge bank tools): Status — Implemented. Several staff members participated in trainings organized by the SRB and FDIC.

### Financial Soundness Indicators (Belgium, 2018–2022; Percent)
- Regulatory capital to risk-weighted assets: 18.8, 18.8, 20.3, 20.4, 20.1
- Tier 1 capital to risk-weighted assets: 16.5, 16.6, 18.2, 18.8, 18.5
- Common Equity Tier 1 capital to risk-weighted assets: ... ... ... ... 17.3
- Tier 1 capital to assets: 6.3, 6.2, 6.3, 6.2, 6.0
- Nonperforming loans net of provisions to capital: 13.6, 13.2, 13.7, 10.6, 10.6
- Nonperforming loans to total gross loans: 2.3, 2.1, 2.1, 2.0, 1.8
- Provisions to nonperforming loans: 44.0, 42.9, 41.1, 45.0, 44.1
- Return on assets: 0.8, 0.8, 0.5, 0.9, 0.8
- Return on equity: 8.2, 8.8, 6.0, 10.0, 9.9
- Interest margin to gross income: 40.4, 39.4, 39.1, 49.7, 50.0
- Noninterest expenses to gross income: 74.7, 74.1, 75.0, 63.4, 63.7
- Liquid assets to total assets: 16.6, 16.4, 21.5, 22.6, 20.2
- Liquid assets to short-term liabilities: 25.0, 23.4, 32.3, 25.2, 22.9
- Liquidity coverage ratio: ... ... ... ... 157.6
- Net stable funding ratio: ... ... ... ... 133.1
- Net open position in foreign exchange to capital: 1.9, 2.1, 2.0, 1.7, 2.4

*Excerpt from Chapter 2 of the Global Financial Stability Report (April 2023) — Belgium section*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1belea2023008.pdf_