The European Banking Authority (EBA) has published its final guidelines on triggers for use of early intervention measures as provided for under the Bank Recovery and Resolution Directive (BRRD).
The BRRD sets out a common European recovery and resolution framework which is composed of three pillars: preparation, early intervention and resolution. The second pillar is composed of the early intervention measures that are set out in article 27, the removal of senior management and the management body (article 28) and the appointment of a temporary administrator (article 29).
Under the BRRD the EBA was assigned a mandate to issue guidelines promoting the consistent application of the triggers for the decision on the application of early intervention. The final guidelines now published follow a previous EBA consultation and specifically identify triggers within the common European supervisory review and evaluation process (SREP) framework, and elaborate on the circumstances prompting the consideration of whether to apply early intervention measures. However, the final guidelines do not establish any quantitative thresholds for indicators that could be perceived as new levels for regulatory requirements for capital or liquidity.
The final guidelines should be read in conjunction with the EBA guidelines on common procedures and methodologies for SREP and guidelines on the interpretation of the different circumstances when an institution shall be considered as “failing or likely to fail.”
View EBA publishes its final Guidelines on triggers for the use of early intervention measures, 8 May 2015