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December 19, 2017

EBA published a report on the application of simplified obligations and waivers in recovery and resolution planning. It also published the final draft regulatory technical standards specifying the eligibility criteria to determine whether institutions could be subject to simplified obligations when drafting such plans. This regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

The report shows that across the EU, significantly divergent practices apply. Differences have been identified both in the assessment of institutions' eligibility for simplified obligations, as well as in determining the reduced scope of the recovery and resolution planning requirements laid down in the Bank Recovery and Resolution Directive (BRRD). The regulatory technical standards should help reduce some of the observed divergent practices by increasing harmonization in simplified obligations eligibility assessment methodologies applied by national authorities. The report shows that, as of April 30, 2017, only around half of the competent and resolution authorities across the EU had granted simplified obligations or waivers to institutions in their respective jurisdictions. The remaining authorities did not apply simplified obligations or waivers because they had chosen not to exercise this discretion or because of delays in the transposition of the BRRD into their national legal frameworks.

With regard to eligibility assessments for simplified obligations, EBA analysis highlights the use by competent and resolution authorities of different practices across the EU. The final draft standards on simplified obligations have addressed most of these divergences by introducing a common two-stage eligibility assessment methodology. This should increase the convergence of practices and ensure a level playing field. Furthermore, the observed differences in the scope of simplifications applied by the authorities. In some member states, simplified obligations were very similar to the full BRRD requirements, whereas, in other jurisdictions, institutions were exempted from applying a substantial part of the relevant BRRD provisions for recovery and resolution planning. EBA will closely monitor the identified differences in relation to the scope of application of simplified obligations and waivers as well as to the impact of the final draft regulatory technical standards.

 

Related Link: Press Release

Keywords: Europe, EU, Banking, Recovery and Resolution Planning, Regulatory Technical Standards, BRRD, EBA

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