EBA Revises Guidelines on Recovery Plan Indicators Under BRRD
The European Banking Authority (EBA) published revised guidelines on recovery plan indicators under the Bank Recovery and Resolution Directive (BRRD or Directive 2014/59/EU). The guidelines establish a common EU approach for developing the framework of recovery plan indicators, providing additional guidance on indicators’ calibration, monitoring, and breaches notifications. The revised guidelines retain most provisions of the existing guidelines, with the exception of replacing or adding a few metrics to the minimum list of recovery plan indicators and updating the format of the existing text to the current legal template for EBA guidelines.
EBA first issued the guidelines on recovery plan indicators in 2015 and decided to amend them based on practical experience acquired in recovery planning. The existing guidelines have been expanded in the following areas:
- Calibration of recovery plan indicators. Additional guidance is provided to institutions on the general principles to follow in setting the thresholds of recovery plan indicators, focusing on the treatment of recovery plan indicators in a crisis, in particular in the case of the application of supervisory relief measures. The guidelines clarify that, in the case of a systemic crisis, there should not be automatic recalibration of recovery plan indicators due to supervisory relief measures, unless it is duly justified and agreed with the competent authority.
- Actions and notifications upon a recovery plan indicator breach and monitoring of recovery plan indicators. The guidelines recognize the importance of timely notification of recovery plan indicator breaches and of frequent monitoring of indicators in a situation of crisis for the institution and the competent authority.
The guidelines specify the minimum list of categories of recovery plan indicators that should be covered (capital, liquidity, profitability, and asset quality indicators) plus two other categories (market-based and macroeconomic indicators) to be included, unless the institution justifies to the competent authorities that they are not relevant to its legal structure, risk profile, size and/or complexity. Limited amendments have been introduced minimum list of indicators. 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 revised guidelines will apply from two months after the publication in all European Union languages. The 2015 guidelines on recovery plan indicators will be repealed at the same time.
Related Links
Keywords: Europe, EU, Banking, BRRD, Recovery Planning, MREL, TLAC, Basel, Resolution Framework, Asset Encumbrance, Regulatory Capital, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Nick Jessop
Scenario modeling expert; risk management specialist; quantitative financial modeler
Previous Article
EBA on Standards Related to Loan Portfolios of Crowdfunding ServicesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.