EBA consults on the implementation of resolution tools

The EBA consults on three sets of Guidelines related to the Bank Recovery and Resolution Directive (BRRD). The documents aim at facilitating the implementation of resolution tools in the EU banking sector, and in particular at regulating the sale of business tool and the asset separation tool, as well as the transfer of an institution or its assets under any of the resolution tools. The consultation runs until 22 December 2014.

 

These Guidelines aim at fostering convergent practices among Member States' resolution authorities by giving comprehensive guidance on which circumstances resolution authorities should assess when taking their decisions.

 

These Guidelines can be divided into two groups and will be consulted upon at two distinct stages. The first one includes the Guidelines on the sale of business tool and the Guidelines on the asset separation tool. Both relate to the implementation of resolution tools against constraints stemming from the EU competition and transparency rules in relation to state aids. They aim at balancing these constraints with the objective of an efficient resolution regime.

 

More specifically the Guidelines on the sale of business tool specify when authorities may deviate from certain marketing requirements for the sale of the business of an institution under resolution. They provide for the possibility of deviating from standard marketing requirements, if the failure of the institution represents a material threat to financial stability and there is a conflict between the effectiveness of the tool addressing such threat and the marketing requirements. The Guidelines contain a comprehensive list of elements to assess this threat and illustrate potential conflicts with each of the marketing requirements. The Guidelines on the asset separation tool give guidance on assets that may be transferred under the asset separation tool. They suggest three steps in this regard: an assessment of the market situation for the assets concerned, the impact that the liquidation may have on markets and financial stability.

 

The second public consultation is on the Guidelines on necessary services, which define a minimum list of necessary ‘critical' services that the resolution authority may require from the institution under resolution (i.e. the purchaser after a sale of business, a bridge bank or the transferee after a transfer of assets). These Guidelines take into account the Financial Stability Board (FSB) guidance on critical shared services and as such, they reflect the recent international discussion and commitments of the G20 members for efficient resolutions.

Comments to these consultations can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 22 December 2014.

 

All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will then take place at the EBA premises on 28 November 2014 from 9.30 am to 12.00 noon UK time.

The proposed Guidelines are based on Articles 39, 42 and 65 of the BRRD, which mandate the EBA to promote convergence of supervisory and resolution practices on the effectiveness of the sale of business tool, on the conditions for applying the asset separation tool and on the power to require the provision of services following a transfer under resolution.