The European Banking Authority (EBA) has published a consultation paper on draft regulatory technical standards (RTS) on simplified obligations under Article 4(6) of the Bank Recovery and Resolution Directive (BRRD).

The consultation paper sets out the EBA’s proposed draft RTS on the criteria listed in Article 4(1) of the BRRD for the purposes of determining whether institutions should be subject to simplified obligations in relation to recovery and resolution planning. Pursuant to Article 4(1) of the BRRD, Member State competent and resolution authorities (the authorities) may simplify recovery and resolution plans, with regard to:

  • the content and the details of recovery and resolution plans provided for in Articles 5 to 12 of the BRRD;
  • the date by which the first recovery and resolution plans are to be drawn up and the frequency for updating them, which may be lower than that provided for in Articles 5(2), 7(5), 10(6) and 13(3) of the BRRD;
  • the content and details of the information required from institutions as provided for in Articles 5(5), 11(1) and 12(2) and in Sections A and B of the Annex to the BRRD; and
  • the level of details for the assessment of resolvability provided for in Articles 15 and 16 and Section C of the Annex to the BRRD.

The assessment of the eligibility for simplified obligations should be made by each authority separately having regard to the impact that the failure of the institution could have on financial markets or on other institutions, on funding conditions and on the wider economy, and taking account of the criteria set out in Article 4(1) of the BRRD.

Pursuant to Article 4(6) of the BRRD, the EBA must develop RTS to further specify the criteria for granting simplified obligations. The draft RTS have been developed taking into account, where appropriate and to the extent possible given that national practices are still evolving, the experience acquired in the application of the EBA guidelines on simplified obligations issued under Article 4(5) of the BRRD. According to the draft RTS the authorities should have regard to the criteria by following a  two stage approach:

  • stage 1 – authorities should select institutions which could potentially benefit from simplified obligations based on a number of quantitative criteria measures on the basis of a set of quantitative indicators; and
  • stage 2 – authorities should verify whether institutions selected as potentially eligible for simplified obligations in stage 1 also meet qualitative criteria.

The draft RTS also provides a short and exhaustive list of exclusions applicable to stage 1 assessment.

The deadline for comments on the consultation paper is 8 August 2017.

A public hearing will also take place at the EBA’s premises on 21 June 2017 from 11.00 to 13.00 UK time.

View EBA consults on draft RTS on simplified obligations under BRRD, 8 May 2017

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