The Bank Recovery and Resolution Directive (BRRD) provides that, prior to resolution, valuations are required to (i) assess whether the conditions for resolution or the write-down or conversion of capital instruments are met; and (ii) inform the choice on the resolution action to be adopted, the extent of any eventual write-down or conversion of capital instruments, and other decisions on the implementation of resolution tools.
Articles 36 and 74 of the BRRD mandates the European Banking Authority (EBA) to set criteria on which valuations in recovery and resolution should be based as well as to develop the methodology for such valuation.
The EBA has now published a consultation paper regarding draft Regulatory Technical Standards (RTS) on valuation in recovery and resolution. The draft RTS do not seek to provide detailed valuation rules for particular types of asset or liability, but specify the principles on the basis of which independent valuers must apply their own information and expertise in particular cases.
The deadline for comments on the consultation paper is 6 February 2015. A public hearing will take place at the EBA premises on 16 January 2015.
View EBA consults on valuation in recovery and resolution, 7 November 2014