08 December 2015
The European Banking Authority (EBA) published today a comparative report on the approaches taken by a sample of European banking groups on scenarios in recovery plans. This benchmarking exercise is aimed at supporting national competent authorities and institutions by providing them with an overview of how scenarios included in recovery plans have been developed so far.
Following the implementation of the Bank Recovery and Resolution Directive (BRRD) in January 2015 and in accordance with the EBA's role in contributing to effective recovery and resolution planning, the EBA has conducted a second thematic comparative analysis on 19 recovery plans across the EU with a focus on scenarios. Scenario analysis is a key part of a sound recovery plan, mainly because it allows institutions and supervisors to test the feasibility of recovery options and the adequacy of recovery indicators.
Overall, the analysis has shown that in a number of recovery plans the approach chosen for the scenario analysis is already broadly in line with the BRRD requirements while other plans remain at a less advanced stage. Among the latter, areas for improvement include relevance and severity of the scenarios and their impact on the relevant recovery indicators.
This comparison analysis should be beneficial to credit institutions in identifying best practices and their positioning in relation to peers, ultimately contributing to ensuring that their approach to scenarios is correctly addressed in the development of their recovery plans.
Franca Rosa Congiu