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On international as well as on national level in several Member States initiatives have been launched on recovery and resolution planning. Henceforth, the EBA has published its proposals for possible regulatory and technical standards (RTS) concerning the establishment of recovery plans, although Art. 5 (7) and 7 (4) of the Commission's proposal for a directive establishing a legal framework on recovery and resolution of credit institutions (RRD), which ought to be the legal basis for the draft RTS, have not yet passed the legislative process.
We have concerns about developing RTS at such an early stage before there is a finalised legal framework. Even if it is taken for granted that the finalised legislative text of the RRD contains a mandate for EBA to develop RTS for recovery planning, there are important aspects of the ongoing discussions in the European Parliament and the Council that should be taken into consideration.
In fact, the negotiation position which the Committee of Economic and Monetary Affairs (ECON) approved on 20 June 2013 as well as the latest compromise texts of the Council contain simplified obligations for institutions with regard to the threat their failure can cause for domestic or interna-tional financial markets. The upcoming discussion gives reason to assume that this aspect will also become an important point in the trialogue.
Unfortunately the RTS draft does not correspond with these developments. With respect to Art 1 RTS the proposed regulations are defined as "minimum information" which should be contained in every recovery plan, although requirements are obviously tailored for institutions that are of systemic importance for financial markets.
Also, according to the proposal of ECON under Art 5 (1a), consideration is being given to the question of whether Member States may delegate the task of drawing up recovery plans to an institutional protection scheme (IPS). According to this proposal, the IPS is permitted [to] determine the measures to be taken by the institution or the IPS itself in a crisis situation. According to the intent and purpose of the arrangement, these are standard plans which stipulate on a binding basis the early intervention measures to be taken by the IPS for the institution concerned. The present requirements of the RTS could not be directly applied here.
Finally, the RTS evidently assume that, in addition to group recovery plans, recovery plans will also need to be prepared for the individual institutions belonging to the group. This contradicts the status of the discussions both at ECON and in the Council. Quite rightly, neither of the compromise texts provides any longer for such a duplication of work.
Overall, the RTS provides a useful framework to support the planning process and is consistent with approaches set out by global standard-setters and national authorities. Introducing such an RTS will help achieve consistency in the authorities' analysis of RRPs, although there is a risk that a detailed level of prescription may constrain a full and comprehensive consideration of the recovery measures and scenario planning.