Response to consultation on draft Regulatory Technical Standards on valuation
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Question 2: Should specific types of information be required on deviations from management assumptions, for example on differences in expected cash flows and/or the discount rates?
See attachedQuestion 3: Would you add, amend, or remove any areas which are likely to be subject to significant valuation uncertainty?
See attachedQuestion 4: Should the buffer instead always be greater than zero? If yes, how should the buffer be determined?
See attachedQuestion 5: Do you agree that a valuation of post-conversion equity is necessary to inform decision on the terms of write-down or conversion?
See attachedQuestion 6: Do you agree with the definition of equity value for this purpose in Article 2 (i)? If not, what changes should be made to the definition? Should the definition be more closely linked to the net asset value determined on the basis of the remainder of valuation 2 adjusted for goodwill/’badwill’, and if so how should that adjustment be estimated?
See attachedQuestion 7: As an alternative, should the use of information that becomes available after the resolution date be more restricted, and in particular permitted only if it refers to facts and circumstances existing at the resolution date which could reasonably have been known at that date?
See attachedQuestion 8: Should the use of information available after the resolution date be further limited, for example by requiring that such information is only used if it results in a significant change in the values of the entity’s assets or liabilities?
See attachedQuestion 9: Should these technical standards provide further detail on the characteristics of appropriate discount rates?
See attachedQuestion 10: Are there any changes you would suggest to the methodology for determining actual treatment of shareholders and creditors in resolution? In particular, should the methodology for valuing equity be further specified and, if so, what should be included in that specification (whether additional detail on the current approach, or a different approach, linked for example to net asset values adjusted for goodwill/badwill)?
See attachedQuestion 11: Should the valuer be required to accompany the comparison envisaged in Article 7 of this Regulation with additional relevant disclosures? If yes, what should those be (for example, documentation of any differences between the valuation of actual treatment and the market price that would be observed for those same claims were they traded in an active market)?
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