11 March 2013

EBA consults on technical standards for recovery plans

The EBA launched a consultation on draft 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. Deadline for comments is 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 five key parts:

• summary of the recovery plan;
• governance, including the conditions and procedures necessary to ensure a timely implementation of the recovery options;
• 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;
• communication plan, including external and internal communication arrangements;
• 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 proposal for a Recovery and Resolution Directive assigns the EBA with a number of tasks related to three main areas:

• drafting of Technical Standards and Guidelines (in areas such as content and assessment of recovery and resolution plans, range of scenarios to be included into the recovery and resolution plans, design and implementation of resolution tools, conditions to trigger resolution, functioning of resolution colleges, etc.); 
• facilitating the adoption of joint decisions in supervisory colleges as well as resolution colleges, where the Authority will participate to ensure the smooth functioning and to play a mediation role;
• the interaction of the European Union with Third Countries with respect to resolution actions.

Comments on this consultation can be sent to the EBA by 11.06.2013.

Press release

Full consultation paper

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