The European Banking Authority (EBA) has published the following documents concerning the resolution framework for EU banks:
- technical advice on the delegated acts on critical functions and core business lines. The aim of this technical advice is to develop a common understanding of which of the functions performed by an institution are critical to the real economy and financial markets and which are core to its own performance. To this end, in this technical advice the EBA proposes shared definitions and harmonised evaluation criteria to be used, as guidance, by financial institutions, competent authorities and resolution authorities to identify “critical functions” and “core business lines”;
- comparative report on the approach to determining critical functions and core business lines in recovery plans. The EBA is tasked with contributing to and actively participating in the development and coordination of effective recovery and resolution planning. Peer group analysis in the form of comparative reports aligns with this mandate. The report follows an EBA analysis of the recovery plans of 27 European cross-border banking groups, with a specific focus on examining how credit institutions have approached the treatment of critical functions and core business lines in their recovery plans. The feedback from this comparative analysis has contributed to the technical advice on the delegated act on critical functions and core business lines;
- technical advice on delegated acts on the deferral of extraordinary ex-post contributions to financial arrangements. In relation to bail-in exemptions, the EBA pointed out that the characteristics of an institution (e.g. size, interconnectedness or complexity) should not automatically justify such exemptions. These should in fact be considered on a case-by-case basis, rather than by considering the specific nature of concerned institutions in isolation, as this could result in competitive unbalances and set wrong incentives for bank structures; and
- technical advice on the delegated acts on the circumstances when exclusions from the bail-in tool are necessary. Regarding the deferral of ex-post contributions to the ‘resolution fund’ provided by the Bank Recovery and Resolution Directive and to which all EU institutions have to contribute, the EBA recommends that Member State competent authorities analyse the impact on solvency and liquidity of institutions before allowing for ex-post contributions, which should only be applied in exceptional cases.
View The EBA advises on resolution procedures for EU banks, 6 March 2015