EBA defines requirements for business reorganisation plans

09 March 2015

The European Banking Authority (EBA) launched a public consultation on its draft Regulatory Technical Standards (RTS) on the content of "Business Reorganisation Plans and Progress Reports" and Guidelines on the assessment of these plans. The RTS and the Guidelines have been developed within the framework established by the Bank Recovery and Resolution Directive (BRRD) which sets procedures for the recovery and resolution of credit institutions, investment firms and related entities across the EU. The consultation runs until 9 June 2015.
 
When resolution authorities use the bail-in tool to recapitalise an institution under resolution, the BRRD requires the resolved institution to draw up a plan setting out the measures aiming at restoring its long-term viability.
 
In a public consultation launched today, the EBA calls for credible resolution plans, the implementation of which should restore confidence in an institution's long-term viability. Plans should, in particular, be based on prudent assumptions and ensure that any shortcomings of the institution are addressed and that there will not be any further need for resolution. The plans should also include effective measures for monitoring their own implementation.
 
The draft RTS develop in detail the elements that should be included in a resolution plan and the content of the related progress reports. The draft Guidelines specify further the minimum criteria for a plan to be approved by Resolution and Competent Authorities across the EU, who should assess the credibility of the assumptions, as well as the presence of concrete performance indicators in the plan. Authorities will also be required to assess whether the plan is realistic and takes into account the opportunities and threats in the relevant market.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 9 June 2015.
 
A public hearing will take place at the EBA premises on 11 May 2015 from 14:00 to 17:00 UK time. All contributions received will be published following the close of the consultation, unless requested otherwise.

Legal basis

The draft RTS have been developed according to Article 52(12) and (13) of the BRRD, which mandates the EBA to (i) draft RTS to specify further the minimum elements that should be included in a business reorganisation plan, and the minimum contents of the progress reports; (ii) to issue guidelines to specify further the minimum criteria that a business reorganisation plan should fulfil for it to be approved by the Resolution and Competent Authorities.