EBA proposed to revise the guidelines on recovery plan indicators, under the Bank Recovery and Resolution Directive (BRRD or Directive 2014/59/EU). To strengthen the quality of recovery indicators framework and contribute to the effective crisis preparedness of institutions, the revisions provide additional guidance on indicators’ calibration, monitoring, and breaches notifications. Most provisions of the existing guidelines remain unaltered, apart from replacing or adding a few metrics to the minimum list of recovery indicators and updating the format of the existing text to the legal template for EBA guidelines. The consultation period for the guidelines ends on June 18, 2021.
EBA issued the existing guidelines in 2015 and is now amending these guidelines based on the practical experience acquired in recovery planning. As part of the proposed revisions, additional guidance has been provided to institutions on the general principles to follow in setting the thresholds of recovery plan indicators, focusing on the treatment of recovery indicators in crisis, particularly in case of application of supervisory relief measures. The revised guidelines clarify that, in the case of systemic crisis, there should not be automatic recalibration of recovery plan indicators due to supervisory relief measures, except in duly justified cases and unless agreed with the competent authority. The revised guidelines recognize the importance of timely notification of recovery indicators breaches and of frequent monitoring of indicators in a situation of crisis. One indicator—cost of wholesale funding—has been removed while three new recovery indicators have been added to the minimum list of recovery indicators—minimum requirements for own funds and eligible liabilities/total loss-absorbing capacity, asset encumbrance, and liquidity position.
The key objective of the recovery plan indicators is to help institutions monitor and respond to the emergence and evolution of stress. Thus, the revised guidelines provide a common EU standard for the recovery plan indicators to ensure they can promptly signal a stressed situation and enable an institution to consider timely and effective recovery actions. On publication of the final guidelines, the original guidelines on the minimum list of qualitative and quantitative recovery plan indicators will be repealed.
Comment Due Date: June 18, 2021
Keywords: Europe, EU, Banking, BRRD, Recovery Planning, MREL, TLAC, Basel, Resolution Framework, Asset Encumbrance, Liquidity Position, EBA
Previous ArticleCNB Communicates on Profit Distribution Framework Amid Pandemic
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.
The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.
The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).
The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The Network for Greening the Financial System (NGFS) published its latest set of long-term climate macro-financial scenarios (Phase IV) for assessing forward-looking climate risks.