EBA publishes its final Guidelines on triggers for the use of early intervention measures

The European Banking Authority (EBA) published today its final Guidelines on triggers for the use of early intervention measures. These Guidelines aim at promoting convergence of supervisory practices in relation to the application of early intervention measures as provided for in the Bank Recovery and Resolution Directive (BRRD). The Guidelines establish a link between the on-going supervision conducted by the Competent Authorities according to the Capital Requirement Directive (CRD) and the early intervention powers set out in the BRRD.

The Guidelines clarify the conditions for the application of early intervention measures provided for in the BRRD. In particular, the Guidelines provide Competent Authorities with the set of triggers that should prompt the decision on the application of early intervention measures.

The triggers provided in the Guideline are, to a large extent, based on the outcomes of the supervisory review and evaluation process (SREP), in particular, on the scores resulting from the assessment conducted by the Competent Authorities in accordance with the EBA Guidelines on common procedures and methodologies for the SREP.

The Guidelines also recognise that early intervention measures can also be triggered on the basis of other circumstances which might not be immediately factored into the outcomes of the SREP assessment, such as significant events or material deterioration or anomalies in the key indicators monitored by Competent Authorities as part of the SREP. However, the Guidelines do not establish any quantitative thresholds for indicators that could be perceived as new capital or liquidity requirements.

Legal basis and next steps

Article 27(4) of the Directive 2014/59/EU (BRRD) introduced a common set of early intervention measures that complement existing supervisory powers and measures, established under the CRD and applied according to the EBA Guidelines on common procedures and methodologies for SREP (EBA/GL/2014/13) published in December 2014.

The EBA has conducted a public consultation on the Guidelines on triggers for early intervention and the final text published today reflects its outcomes.

These Guidelines are addressed to Competent Authorities and will apply from 1 January 2016. Following the publication of the English version, the EBA will make available, in due course, the translations of the Guidelines in all EU languages. Within two months from the publication of the translated Guidelines, Competent Authorities shall confirm to the EBA their compliance status, which will be disclosed on the EBA website.

The Guidelines complement the EBA Guidelines on common procedures and methodologies for SREP; and Guidelines on the circumstances under which an institution shall be considered as ‘failing or likely to fail' (triggers for resolution). These three Guidelines together form a set of supervisory guidance linking on-going supervision, early intervention and resolution.