EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD). The comparative analysis of recovery and resolution plans by EBA indicates that further work is needed in this area to study the impact of resolution plans on recovery planning and develop further guidance on certain aspects of the interlinkage.
The report outlines the observations of EBA from its first comparative analysis of recovery and resolution plans and identifies best practices and areas where further improvement and/or clarifications are needed. In addition, on certain common elements between both types of plans, such as critical functions and access to central bank facilities, the report clarifies their specific purpose in each planning phase and the advantages or disadvantages of a potential convergence or harmonization. Finally, the report analyzes the potential impact of recovery options on the resolvability of an institution and introduces an assessment framework to support the assessment and consultation process between resolution and competent authorities. Annex 1 to the report includes a template used to perform comparative analysis of a sample of recovery and resolution plans while Annex 2 presents a practical tool to help resolution authorities in conducting the analyses of the potential impact of recovery options on the resolvability of an institution.
The assessment in this report is intended to enhance synergies between recovery and resolution planning phases and ensure consistency in their potential implementation. The findings of the comparative analysis of recovery and resolution plans reveal that further work is needed in this area. Therefore, EBA plans to perform further work on the impact of resolution plans—particularly the impact of measures to remove impediments to resolvability—on ongoing supervision and recovery planning. The guidance work on certain practical aspects of interlinkage, such as on the timelines of recovery and resolution planning cycles, will also be undertaken, as such work is deemed useful for enhancing interactions among competent authorities and the resolution authorities.
Keywords: Europe, EU, Banking, Recovery Planning, Resolution Planning, BRRD, Systemic Risk, Comparative Analysis, Resolution Framework, EBA
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous ArticleQCB Announces Measures to Address Impact of COVID-19 Outbreak
The Network for Greening the Financial System (NGFS) launched its first user feedback survey on climate scenarios, with the feedback period ending on February 27, 2023.
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.