18 March 2021
- The revised Guidelines provide a common EU standard for the recovery plan indicators to ensure they can promptly signal a stressed situation and enable the institution to consider timely and effective recovery actions.
- The key objective of the revised Guidelines is to strengthen the quality of the recovery indicators framework in order to ensure institutions’ effective crisis preparedness.
- The amendments of the revised Guidelines introduce few changes to the minimum list of recovery indicators and focus on practical aspects such as calibration of the thresholds of recovery plan indicators and their monitoring.
The European Banking Authority (EBA) published today a consultation paper on its revised Guidelines on recovery plan indicators. While maintaining overall stability to the current recovery plan indicators framework, the revised Guidelines provide additional guidance on indicators’ calibration, monitoring and breaches notifications. The amendments 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 issued the existing Guidelines on recovery plan indicators in 2015 but decided to amend them based on practical experience acquired in recovery planning.
The revised Guidelines provide additional guidance on the calibration of thresholds of recovery indicators to ensure that recovery options are implemented early enough to be effective. The amendments also emphasise the importance of constant monitoring of recovery indicators and timely notification of their breaches to supervisors. Lastly, three new recovery indicators (MREL/TLAC, asset encumbrance and liquidity position) have been added to the minimum list of recovery indicators and one (cost of wholesale funding) has been removed.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 18 June 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 15 April from 14:00 to 16:00 CET. The EBA invites interested stakeholders to register using this link.
The dial-in details will be communicated in due course.
Legal basis, background and next steps
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.
Under the mandate of Article 9(2) of BRRD, in 2015 the EBA issued Guidelines to specify the minimum list of quantitative and qualitative indicators for the purposes of recovery planning (EBA-GL-2015-02). Since the development of the Guidelines in 2015, significant practical experience in developing and assessing recovery plans has been acquired. Against this background, the EBA has concluded that, while limited amendments to its existing Guidelines are needed, it is necessary to introduce additional guidance on certain parts of the indicator framework.
The revised Guidelines are published for a three-month public consultation where the EBA is consulting only on changes to the existing Guidelines on the minimum list of qualitative and quantitative recovery plan indicators. There is no consultation on the text of the original Guidelines, which remains unchanged.
The EBA will finalise these Guidelines once the consultation responses have been assessed. Upon publication of the final Guidelines, the original ones on the minimum list of qualitative and quantitative recovery plan indicators will be repealed.