The Bank Recovery and Resolution Directive establishes a framework for the recovery and resolution of EU credit institutions and investment firms.
In particular the Directive sets out certain obligations on these institutions to develop and maintain recovery plans that set out measures that such institutions should take to restore their financial position. Member State competent authorities are to evaluate recovery plans pursuant to rules specified in regulatory technical standards (RTS) developed by the European Banking Authority (EBA). In line with the RTS, the institutions are to include in their recovery plans a set of indicators and a range of scenarios to test recovery options.
The EBA has now published a consultation paper setting out draft guidelines which specify a minimum set of qualitative and quantitative indicators that institutions should include in their recovery plans, namely in relation to capital, liquidity, profitability and asset quality. The draft guidelines also identify market-based and macro-economic indicators that institutions should include if relevant to their legal structure, risk profile, size and complexity.
The deadline for comments on the draft guidelines is 2 January 2015.
View EBA consults on qualitative and quantitative recovery plan indicators, 26 September 2014