11 March 2013
The European Banking Authority (EBA) launches today a consultation on Draft Regulatory Technical Standard (RTS) on the content of recovery plans. In doing so the EBA starts the preparatory work for the implementation of the Recovery and Resolution Directive (RRD) currently discussed by the EU legislators. The consultation runs until 11 June 2013.
These RTS will contribute to the European Single Rulebook in banking and aim at enhancing financial stability and minimising the probability of banks' failure.
Recovery plans shall set out the arrangements and measures a bank would adopt to restore long-term financial viability in case of severe distress. According to the proposed draft RTS, recovery plans developed at group and individual level will need to include at least the following 5 key parts:
(i) summary of the recovery plan;
(ii) governance, including the conditions and procedures necessary to ensure a timely implementation of the recovery options;
(iii) strategic analysis, including a description of the institution's core business lines and critical functions together with the different recovery options designed to respond to financial stress scenarios ;
(iv) communication plan, including external and internal communication arrangements;
(v) and preparatory measures taken or to be taken to improve the implementation and effectiveness of the plan.
The content proposed in these RTS builds on the EBA Recommendation issued in January 2013 to foster the development of group recovery plans and their discussion within colleges of supervisors.
The proposed consultation paper is based on the draft Directive establishing a framework for the recovery and resolution of credit institutions and investment firms (the so-called Recovery and Resolution Directive - RRD) as proposed by the European Commission on 6 June 2012. As the text is still being discussed by the EU legislators (European Parliament and Council), the draft RTS might be amended after the consultation to take into account inter alia possible changes in the final RRD.
The EBA will submit the final draft RTS on recovery plans within 12 months from the date of entry into force of the RRD.
EBA's role in the implementation of the Recovery and Resolution Directive (RRD)
The proposal for a Recovery and Resolution Directive assigns the EBA with a number of tasks related to three main areas:
Comments on this consultation can be sent to the EBA by e-mail to EBA-CPfirstname.lastname@example.org by 11.06.2013, indicating the reference EBA/CP/2013/01.
All contributions received will be published unless you request otherwise.
A public hearing will take place at the EBA premises on 30 April 2013 at 9.30am. To register for the public hearing, click here.
Notes to editors
1. The European Commission presented on 6 June 2012 a proposal for a Directive establishing a framework for the recovery and resolution of credit institutions and investment firms (the so-called Recovery and Resolution Directive - RRD). The objective of the Directive is to ensure that in the future authorities will have the means to intervene decisively both before problems occur and early on in the process if they do (prevention and early intervention powers). Furthermore, if the financial situation of a bank deteriorates beyond repair, the proposal ensures that a bank's critical functions can be rescued while the costs of restructuring and resolving failing banks fall upon the bank's owners and creditors and not on taxpayers (resolution powers).
2. The EBA adopted on 23 January 2013 a formal Recommendation to ensure that major EU cross-border banks develop group recovery plans by the end of 2013. The plans shall be submitted to the respective competent authorities and discussed within colleges of supervisors. The aim of the Recommendation is to spur the development of recovery plans and to foster convergence on the highest standards across the Union.
3. These draft RTS are produced in accordance with Article 10 of the EBA regulation and shall be finally adopted by the European Commission by means of regulations or decisions. According to EU law, EU regulations are binding in their entirety and directly applicable in all Member States. This means that, on the date of their entry into force, they become part of the national law of the Member States and their implementation into national law is not only unnecessary but also prohibited by EU law, except in so far as this is expressly required by them.