On 14 December 2022, the European Banking Authority (EBA) published a Consultation Paper on draft guidelines on overall recovery capacity (ORC) in recovery planning.
The objective of the ORC is to provide a summary of the overall capability of the institution to restore its final position after a significant deterioration by implementing suitable recovery options. The assessment by competent authorities of an institution’s overall recovery capacity allows it to understand to what extent an institution would be able to recover from a range of potential crisis situations.
The main goal of the guidelines is to harmonise the observed practices on the ORC determination and assessment, so as to improve the usability of recovery plans and make crisis preparedness more effective.
The draft guidelines are composed of two sections.
- The first section is addressed to institutions and is intended to provide guidance on the relevant steps to set-up a reliable ORC framework.
- The second section is addressed to competent authorities and complements the framework by harmonising the core elements of the competent authorities’ assessment of the ORC from both a quantitative and qualitative perspective.
The deadline for comments on the Consultation Paper is 14 March 2023.