On 22 April 2020, the European Banking Authority (EBA) published a statement on additional supervisory measures in light of the COVID-19 pandemic.

The EBA recognises the need for a pragmatic approach to SREP assessments in 2020, focusing on the most material risks and vulnerabilities driven by the crisis.

On recovery planning activities for institutions, the EBA believes the focus should be placed on understanding which recovery options are necessary and available under the current stressed conditions. In particular, whilst the current COVID-19 stress evolves, the EBA reminds that, in accordance with the existing regulatory framework (the Bank Recovery and Resolution Directive, Delegated Regulation (EU) 2016/1075, EBA guidelines on the minimum list of qualitative and quantitative recovery plan indicators and EBA guidelines on the range of scenarios to be used in recovery plans), institutions should:

  • monitor their recovery plan indicators and report to their competent authority any breach even if it does not result in the implementation of recovery actions;
  • regularly review and update their list of credible and feasible recovery options included in their recovery plans, taking into account the current COVID-19 system-wide stress; and
  • where feasible and necessary, take any preparatory measures to increase the institutions’ ability to quickly implement these recovery options.

Moreover, the EBA adds that institutions should analyse how the COVID-19 stress might evolve for them and estimate their overall recovery capacities for liquidity and capital.

The EBA also emphasises the importance of digital operational resilience. In this respect, the EBA calls on institutions to ensure business continuity, adequate ICT capacity and security risk management. The new EBA ICT and security risk management guidelines will help financial institutions and supervisors to focus on priority areas.