EBA technical standards will help reduce divergent practices in the application of simplified obligations and waivers in recovery and resolution planning

The European Banking Authority (EBA) published today a Report on the application of simplified obligations and waivers in recovery and resolution planning and its final draft Regulatory Technical Standards (RTS) specifying the eligibility criteria to determine whether institutions could be subject to simplified obligations when drafting such plans. The Report shows that across the EU, significantly divergent practices apply. Differences have been identified both in the assessment of institutions' eligibility for simplified obligations, as well as in determining the reduced scope of the recovery and resolution planning requirements laid down in the Bank Recovery and Resolution Directive (BRRD). The RTS should help reduce some of the observed divergent practices by increasing harmonisation in simplified obligations eligibility assessment methodologies applied by national authorities. 

 

In particular, the Report shows that as of 30 April 2017, only around half of the competent and resolution authorities across the EU had granted simplified obligations or waivers to institutions in their respective jurisdictions. The remaining authorities did not apply simplified obligations or waivers because they had chosen not to exercise this discretion or because of delays in the transposition of the BRRD into their national legal frameworks.

 

With regard to eligibility assessments for simplified obligations, the EBA analysis highlights the use by competent and resolution authorities of different practices across the EU. The final draft RTS on simplified obligations have addressed most of these divergences by introducing a common two-stage eligibility assessment methodology. This should increase the convergence of practices and ensure a level playing field. 

Furthermore, the EBA observed differences in the scope of simplifications applied by the authorities. In some Member States, simplified obligations were very similar to the full BRRD requirements, whereas in other jurisdictions institutions were exempted from applying a substantial part of the relevant BRRD provisions for recovery and resolution planning. 

 

The EBA will closely monitor the identified differences in relation to the scope of application of simplified obligations and waivers as well as to the impact of the final draft RTS.

The final draft RTS have been developed according to Article 4(6) of the BRRD, which mandates the EBA to develop draft RTS to further specify the criteria listed in Article 4(1) of the BRRD for granting simplified obligations. These RTS also build on the experience gained by national authorities through the implementation of the Guidelines on simplified obligations issued by the EBA in July 2015. 

 

The EBA has carried out its assessment of the application of simplified obligations and waivers in recovery and resolution planning based on data submitted by competent and resolution authorities during two reporting periods in 2016 and 2017, as required under the Commission Implementing Regulation (EU) 2016/96 (developed on the basis of the EBA Implementing Technical Standards on simplified obligations reporting). In accordance with Article 4(7) of the BRRD, the EBA should submit this assessment to the European Parliament, the Council and the Commission by 31 December 2017.