EBF

The EBF dos not suggest any change to the definition of valuation approaches.
Yes, as previously mentioned, it may encompass: (i) historical evidence based on supervision authorities warnings as to the correct usage of prudential assumptions by the failing entity; (ii) an evidence, like benchmarking, that the reason for the change in the assumptions is based on market practice.
No comments.
See general comments.
If that valuation doesn't exist how can it be ensured/demonstrated that the no worse off"/"safeguarding of creditor seniority" principle is safeguarded by the proposed resolution strategy? Or is that guarantee only relevant for compensation calculation purposes? And, in that case, is it fair that a possible error in the conversion be transferred/be the responsibility of the Resolution Fund instead of being borne by creditors/shareholders of the entity under resolution?"
No comments.
We find it difficult to support the argument which could reasonably have been known" when all valuations are made based on the identification of quantitative and qualitative factors that may influence the values."
We agree with the principle, which is aimed at re-establishing fairness in the values received by all stakeholders. It raises, however, some questions: i) What is the meaning of significant change"? We believe there should be, for example, a percentage limit to the change in values; ii) We understand there is a need to set a moment after which there will be no further revisions to the identified values, to avoid introducing an element that may dictate the need to change the decision made; iii) It results in an uncertainty factor to the Resolution Fund in case the Fund is responsible for the reimbursement of differences."
A comprehensive and detailed reasoning of the valuation, as well as of all its supporting elements (which go beyond the information on discount rates), should be an integral part of the exercise.
Calculations, either for equities or debt instruments, should be based on market prices, except in cases where there is proven evidence of market disruptions (may need the endorsement from macro prudential and markets supervision authorities?). We believe it makes sense to link the valuation process under discussion on this paper with the position that is being taken on other EBA's public consultations, namely EBA/CP/2014/39 (CP on the rate of conversion of debt to equity in bail-in).
Yes, as set out in our previous answers.
EBF