On 9 November 2021, the European Banking Authority (EBA) published a final report containing guidelines on recovery plan indicators. The purpose of the guidelines is to establish a common EU approach for developing the framework of recovery plan indicators, providing additional guidance on indicators’ calibration, monitoring and breaches notification.
Under the mandate of Article 9(2) of the Bank Recovery and Resolution Directive, in 2015 the EBA issued guidelines to specify the minimum list of quantitative and qualitative indicators for the purposes of recovery planning. They have established a common EU standard for developing the framework of recovery plan indicators, while leaving some constrained flexibility to tailor a set of recovery plan indicators depending on institutions’ specificities.
Since the development of the guidelines in 2015, significant practical experience in developing and assessing recovery plans has been acquired. Moreover, in 2020 the EBA conducted a survey among Member State competent authorities on the performance of recovery plan indicators in the context of the COVID-19 outbreak and previous idiosyncratic crises. Against this background, the EBA has concluded that, while only limited amendments to its existing guidelines are needed, it is necessary to introduce additional guidance on certain parts of the recovery plan indicator framework.
These latest guidelines provide additional guidance on the calibration of thresholds of recovery indicators to ensure that recovery options are implemented early enough, so as to be effective. The guidelines also emphasise the importance of constant monitoring of recovery indicators and timely notification of their breaches to supervisors. Lastly, the minimum list of indicators includes three new additional recovery indicators (MREL/TLAC, asset encumbrance and liquidity position) to the minimum list of recovery indicators and one of them (cost of wholesale funding) has been removed.
The guidelines will apply from two months after their publication in all EU languages. The 2015 guidelines will be repealed at the same time