EBA recommends major EU cross-border banking groups to develop recovery plans

The EBA adopted a formal Recommendation to ensure that major EU cross-border banks develop group recovery plans by the end of 2013. The plans shall be submitted to the respective competent authorities and discussed within colleges of supervisors. The aim of the Recommendation is to spur the development of recovery plans and to foster convergence on the highest standards across the Union.

The Recommendation has been adopted as part of the EBA's mandate to contribute to the development of effective and consistent recovery and resolution plans. It intends to fill the interim period before a comprehensive legislative framework for the recovery and resolution of credit institutions is implemented at EU level following the proposal by the European Commission presented in June 2012.

Group recovery plans should be drafted in accordance with the international standards agreed under the auspices of the Financial Stability Board and consistently with the template attached to the Recommendation. The template covers the key elements that should be addressed in a recovery plan:

• general but comprehensive information on the institution and its governance structure;
• the list and description of options available in a crisis situation and an assessment of their execution and impact; 
• the measures that the institution plans to implement to facilitate, in the future,  the update of the recovery plan or its implementation in crisis times.

The template for the recovery plans follows an EBA discussion paper published in May 2012. It is in line with the Key Attributes of Effective Resolution Regimes for Financial Institutions issued by the Financial Stability Board in October 2011.

The EBA Recommendation is addressed to the national competent authorities which are home supervisors for the 39 European banks listed in the annex. Those national competent authorities shall notify the EBA by 23 March 2013 as to whether they comply or intend to comply with this Recommendation.

Notes to the Editors

1. Following the G-20 Leaders Conclusions at the Pittsburgh Summit on 2009, the Financial Stability Board issued in October 2011 the Key Attributes of Effective Resolution Regimes for Financial Institutions which set out the core elements that the FSB considers to be necessary for an effective resolution regime, including specific requirements for recovery and resolution planning

2. On 15 May 2012, the EBA published a discussion paper on recovery plans which presented the key elements and essential issues that should be addressed in a recovery plan, in line with the FSB KAs. For this purpose, the discussion included a possible "template for recovery plan".

3. On 6 June 2012, the European Commission published a proposal for a directive of the European Parliament and the Council establishing a framework for the recovery and resolution of credit institutions and investment firms.

4. Article 25 of the EBA Regulation (1093/2010) provides that "the Authority shall contribute to and participate actively in the development and coordination of effective and consistent recovery and resolution plans".

5. Article 16 of the EBA Regulation provides that "the Authority shall, with a view to establishing consistent, efficient and supervisory practices within the ESFS, [...] issue recommendations addressed to competent authorities or financial institutions"