DB generally agrees with the approach taken in the draft Guidelines, however, we would like to reiterate our support for the provisions in paragraph 7 confirming that breaching the triggers does not automatically mean the authority should apply early intervention measures, but that this will prompt competent authorities to further investigate and assess the urgency of the situation.
Additionally, we would encourage adding additional language to the Guidelines that helps ensure that the early intervention process is based on a continuous and open dialogue between the home supervisor and the institution involved to ensure any supervisory assessment and potential actions are aligned with the firm’s recovery plan escalation process and the implementation with specific recovery measures initiated by the firm.
We agree with the level of detail used in the draft Guidelines, however, we would appreciate more clarity regarding the details of the valuation information referred to in paragraph 10 that competent authorities are supposed to gather when an overall SREP assessment score of 4 is assigned.
Even though we support the integration of the regulatory early intervention process with the SREP scoring methodology, we would flag the need for greater transparency on communicating SREP scores to banks whilst safeguarding the confidentiality of such scores. This becomes significantly more important in a stage of early intervention. Also, as stated earlier in this response, we would stress the importance of maintaining a continuous open dialogue with individual banks throughout the SREP review process, as well as the related early intervention process.
In addition, we would like to alert the EBA to the uncertainty that currently exists on the communication and governance procedures between competent authorities and resolution authorities (in the case these are different regulatory authorities) in the early intervention stages. Regulatory authorities need to establish clear procedures to ensure an integrated regulatory intervention process. More importantly, both the SREP and the regulatory intervention framework need to be coordinated with the individual institutions’ internal recovery plan escalation framework to ensure consistency and predictability of action and accountabilities.
DB supports the use of material deterioration or anomalies in key indicators as triggers for further investigation by supervisory authorities. However, we would reiterate our support for the provisions in these guidelines confirming that breaching these triggers should not lead to the automatic application of early intervention measures.
As for the authority granted to competent authorities related to the immediate application of early intervention measures in the interest of time for certain circumstances under paragraph 25, we would suggest additional language to confirm that any immediate application of early intervention measures needs to be closely coordinated with the individual bank in question and only take effect after the failure of the bank’s internal recovery plan escalation framework and implementation of recovery measures.
Whereas we generally support the use of operational risk indicators for risk management related purposes, we question the need to include some of the illustrative examples of significant events as outlined on pages 15 and 16 of the proposed guidelines, in particular related to the examples of adverse court ruling, negative results of investigations and tax litigations. We would suggest removing these as significant events that should be considered as possible triggers upon which to determine whether early intervention measures should be applied, given that the decision to consider applying early intervention measures should be based on a more comprehensive assessment of risk exposures related to such events.
We would also suggest fully aligning the terminology and definitions used in these Guidelines with the EBA Regulatory Technical Standards on assessment methodologies for the Advanced Measurement Approaches for operational risk under Article 312 of Regulation (EU) Number 575/2013 once these have been adopted to ensure these examples are aligned with banks’ individual operational risk frameworks.
We do not have any material comments on the cost-benefit analysis and impact assessment.