Featured Product

    ECB Issues Results of Benchmarking Analysis of Recovery Plans of Banks

    April 13, 2021

    ECB published results of the benchmarking analysis of the recovery plan cycle for 2019. The results provide a horizontal overview of key characteristics of recovery plans of significant institutions and their assessments to facilitate identification of key focus points for improvements. The benchmarking exercise encompasses plans assessed by the Single Supervisory Mechanism until July 2020. The analysis is based on the recovery plan standardized reporting templates submitted in the 2019 cycle and FINREP/COREP. Overall, ECB assessed 96 recovery plans of significant institutions in the given cycle in ECB's role as the consolidating supervisor while 93 standardized reporting templates were analyzed.

    In February 2021, ECB published certain key findings from the 2020 benchmarking exercise. These findings show that banks need to improve their recovery plans to adequately address the financial impact of extraordinary system-wide crises such as the COVID‑19 pandemic. One key finding is that the pandemic stress could significantly reduce the overall recovery capacity of banks, in terms of the extent to which a bank’s recovery options would allow it to recover from situations of severe financial stress. Looking at liquidity recovery capacity, wholesale funding is the most significant recovery option for most banks. If such funding became unavailable in a crisis situation, the liquidity recovery capacity would fall by 27%. The analysis showed that if a bank needed to increase its liquidity coverage ratio and wanted to mobilize 50% of its liquidity recovery capacity to do so, this would take six months in a pandemic-related scenario, compared with three months under the original assumptions.

    Another key finding is that, in a severe stress scenario, banks appear to rely on a very limited number of recovery options for the bulk of their overall recovery capacity. This implies that a bank’s ability to restore its financial health could be significantly lower if one or more of the recovery options were not available. ECB Banking Supervision also found that some of the recovery indicators, which banks use to monitor their financial health, were not fully effective against the pandemic stress. Proper follow-up of an indicator breach is crucial for effective monitoring and enables banks to take more informed decisions and appropriate action to resolve the stress situation. In the light of these findings, ECB Banking Supervision plans to focus on challenging banks’ recovery options and recovery capacity as part of the recovery plan assessments in 2021.

     

    Related Links

    Keywords: Europe, EU, Banking, Recovery Planning, Resolution Framework, COVID-19, LCR, ECB

    Featured Experts
    Related Articles
    News

    BoE Seeks Information Before Migrating Statistical Reporting to BEEDS

    The Bank of England (BoE) published the Statistical Notice 2021/09 requiring additional information from firms and software vendors to assist in the onboarding and testing phases for migrating statistical reporting to the BEEDS portal.

    October 25, 2021 WebPage Regulatory News
    News

    CFRF Publishes Guides to Manage Financial Risks from Climate Change

    The working groups of the Climate Financial Risk Forum (CFRF) published a second round of guides (or Session 2 guides), written by the industry for the industry, to help financial firms manage climate-related financial risks.

    October 21, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EC Sets Out Work Program for 2022

    The European Commission (EC) adopted the work program for 2022.

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    ESAs Report on Supervisory Independence of Competent Authorities

    The European Supervisory Authorities (ESAs) published individual reports on the supervisory independence of competent authorities in their respective sectors.

    October 18, 2021 WebPage Regulatory News
    News

    FED Updates FR Y-9C Form and Instructions, Proposes to Extend FR 2510

    The Board of Governors of the Federal Reserve System (FED) updated reporting form and instructions, along with the associated supplemental instructions, for the information collection on consolidated financial statements for holding companies (FR Y-9C).

    October 18, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7590