Article 32 of the Bank Recovery and Resolution Directive mandates the European Banking Authority (EBA) to specify the type of tests, reviews or exercises that may lead to a precautionary recapitalisation of an institution, under certain conditions.
The EBA has now published final guidelines which specify the main features of the types of tests, reviews or exercises that may lead to support measures. The guidelines state that the main features of a test or a review should be a timeline, a scope, a time horizon and reference date, a quality review process, a common methodology and, where relevant, a macro-economic scenario and hurdle rates, as well as a timeframe to address the shortfall.
The guidelines should be implemented by Member State competent authorities by 1 January 2015.
View EBA publishes guidelines on recovery and resolution, 22 September 2014