On 19 July 2023, the European Banking Authority (EBA) published a final report containing guidelines on overall recovery capacity in recovery planning.

The guidelines specify how institutions should include in the recovery and group recovery plans a summary of their overall recovery capacity (ORC) in accordance with Articles 5 and 7 and Annex, Section A, point (1) of the Bank Recovery and Resolution Directive (BRRD) and with Chapter 1, Section II of Commission Delegated Regulation (EU) 2016/1075 and how Member State competent authorities should assess the ORC of institutions within the context of the assessment of the recovery and group recovery plans in accordance with Articles 6 and 8 of the BRRD and Chapter 1, Section III of the Commission Delegated Regulation.

The ORC framework is based on two fundamental components, the:

  • List of credible and feasible recovery options.
  • Range of sufficient severe scenarios.

In defining the methodology for the determination of the ORC, the guidelines specify the steps that an institution should follow:

  • Selection of recovery options.
  • Adjustment of recovery options.
  • Calculation of ‘scenario-specific recovery capacity’.
  • Determination of the ORC range.

An illustrative example on the relevant steps for the ORC determination was provided in the ‘Background and rationale’ section of the EBA’s earlier consultation paper.

The guidelines will be translated into the official EU languages and published on the EBA’s website. The deadline for Member State competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations. The guidelines will apply from 3 months after the date of publication on the EBA’s website of the guidelines in all EU official languages.