06 May 2015
The European Banking Authority (EBA) published today its final Guidelines on indicators for the recovery and resolution plans of credit institutions and investment firms across the EU. These provide the minimum list of qualitative and quantitative indicators that institutions should include in their recovery plans and will function as triggers for the recovery plans, as prescribed by the EU Bank Recovery and Resolution Directive (BRRD).
The EBA Guidelines set the requirements that institutions across the EU should follow when developing their recovery plans. The minimum list that institutions should include in their plans comprises, both qualitative and quantitative, indicators grouped into different categories such as capital, liquidity, profitability and asset quality. Where relevant to the characteristics of the specific institutions, macroeconomic and market-based indicators are also included. These indicators will serve to identify the points at which appropriate recovery measures should be considered.
On top of the minimum list of indicators, the EBA Guidelines provide a list of additional indicators institution may want to use. The task of assessing recovery plans and their recovery indicators will be for the supervisory authorities, as they have to ensure that credit institutions have put in place appropriate arrangements for the regular monitoring of the indicators.
These Guidelines are addressed to competent authorities and will enter into force on 31 July 2015. 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 BRRD is the EU Directive that requires credit institutions and investment firms across the EU to develop recovery plans defining the measures they would adopt to restore their long-term financial viability in distressful situations.
The Guidelines have been developed in accordance with Article 9(2) of Directive 2014/59/EU (BRRD) which mandates the EBA to specify a minimum list of quantitative and qualitative indicators for the purposes of recovery planning. These Guidelines complement a set of regulatory products related to recovery planning, which include: (i) the EBA draft regulatory technical standards specifying the information to be contained in the recovery plan; (ii) the EBA draft regulatory technical standards specifying the minimum criteria that the competent authority is to consider when assessing recovery plans; (iii) the EBA guidelines specifying the range of scenarios to be used for recovery plans.