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The European Banking Authority (EBA) defined details for business reorganisation plans that identify and address the causes of the institution's failure and set out how the institution will be restored to long-term viability. As explained in the EBA RTS, the reorganisation strategy should be prudent and take into account the strengths and weaknesses of the institution, the relevant market and the macro-economic situation.
A set of Guidelines jointly delivered with the RTS will guide both resolution authorities and competent authorities across the EU in assessing business reorganisation plans, and the appropriateness of the strategy contained within them. It will also look at their consistency with other public policy objectives and rules. Additionally, the Guidelines will include provisions on the coordination between resolution and competent authorities.
The Bank Recovery and Resolution Directive (‘BRRD') entrusts resolution authorities with a set of tools and powers to intervene in non-viable institutions. Where the resolution authority applies the bail-in tool to recapitalise an institution under resolution, the BRRD requires that the institution draws up a business reorganisation plan that restores the institution's long-term viability. Also, the institution will be required to submit a progress report twice annually throughout the process of reorganisation.