09 November 2021
The European Banking Authority (EBA) published today Guidelines on recovery plan indicators. 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 guidelines aim at strengthening the quality of recovery indicators framework and contributing to effective crisis preparedness of institutions.
The main objective of recovery plan indicators is to help institutions monitor and respond to the emergence and evolution of stress. The EBA first issued guidelines on recovery plan indicators in 2015 and decided to amend them based on practical experience acquired in recovery planning.
These Guidelines provide additional guidance on the calibration of thresholds of recovery indicators to ensure that recovery options are implemented early enough, so as to be effective. The Guidelines also emphasise the importance of constant monitoring of recovery indicators and timely notification of their breaches to supervisors. Lastly, the minimum list of indicators includes three new additional recovery indicators (MREL/TLAC, asset encumbrance and liquidity position) to the minimum list of recovery indicators and one of them (cost of wholesale funding) has been removed.
In accordance with Article 9(1) of the Bank Recovery and Resolution Directive (BRRD), a recovery plan should include a framework of indicators established by each institution with the aim of identifying the points at which the escalation process should be activated and to assess what appropriate actions referred to in the recovery plan may be taken.
These Guidelines have been developed under the mandate of Article 9(2) of BRRD. Since the development of the Guidelines in 2015 (EBA-GL-2015-02), significant practical experience in developing and assessing recovery plans has been acquired. Against this background, the EBA has concluded that, while limited amendments to the 2015 Guidelines were needed, it was necessary to introduce additional guidance on certain parts of the indicator framework. The 2015 Guidelines are therefore repealed at the same time as the publication of these Guidelines.
Franca Rosa Congiu