Guidelines on simplified obligations

These Guidelines define how EU authorities should assess whether an institution is eligible for simplified obligations. They are part of the EBA’s work to promote convergence of practices between competent and resolution authorities across the EU.

Documents

Final Report Guidelines on simplified obligations (Repealed)
Compliance table (last updated 23 March 2021)

Links

Single Rulebook Q&A -Question ID: 2015__2078

News

EBA consults on the eligibility of institutions for simplified obligations for recovery and resolution planning

25 September 2014

The European Banking Authority (EBA) launched today two consultations on its draft Guidelines and Implementing Technical Standards (ITS) related to recovery planning, resolution planning and resolvability assessments under the Bank Recovery and Resolution Directive (BRRD). The Guidelines define how EU authorities should assess whether an institution is eligible for simplified obligations. The EBA will monitor any divergence of approach in the application of simplified obligations and will report accordingly to the European Parliament, the Council and the Commission. The papers launched for consultation today are part of the EBA's work to promote convergence of practices between competent and resolution authorities across the EU. These consultations run until 3 January 2015.

According to the BRRD, when determining the nature of the obligations imposed in relation to recovery planning, resolution planning and resolvability assessments for institutions, competent and resolution authorities across the EU should take into consideration the impact that the failure and subsequent winding up of an institution under normal insolvency proceedings could have on financial markets, other institutions, funding conditions, as well as on the wider economy. For this purpose, the BRRD details a series of criteria against which institutions should be assessed: the nature of the institution's business, its shareholding structure, its legal form, its risk profile, size and legal status and its interconnectedness to other institutions or to the financial system in general.

In particular, the draft Guidelines further specify the criteria laid down in the BRRD by establishing a mandatory set of indicators against which competent and resolution authorities should determine the impact of the failure of an institution and its winding up under normal insolvency proceedings and therefore its eligibility for simplified obligations. A list of optional indicators is also provided which, in addition to the mandatory indicators, may be taken into account in the assessment process.

The aim of the Guidelines is to promote a common EU framework for the application of simplified obligations, in line with the principle of proportionality. The work of the EBA also aims to facilitate cooperation among different EU authorities, in particular for those institutions and groups that have a cross-border presence i.e. operate in more than one EU Member State.

The Guidelines also clarify that Globally Systemically Important Institutions (G-SIFI) and Other Systemically Important Financial Institutions (O-SIFI) should not be subject to simplified obligations, since it is assumed that their failure would always be likely to have a significant negative effect.

The draft ITS launched for public consultation along with the Guidelines include a number of templates and definitions to be used by competent and resolution authorities for the identification and transmission of information to the EBA about the way they have assessed institutions against the criteria set out in the BRRD, including the mandatory indicators, and the nature of the simplified obligations applied to eligible institutions. These templates establish a common framework for reporting which will enable the EBA to identify accurately any divergences in the approach of different EU authorities and subsequently report on this to the European Parliament, the Council and the Commission. This report is required to be produced by 31 December 2017.

Consultation process

Comments to these consultations 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 3 January 2015.

All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will then take place at the EBA premises on 25 November 2014 from 10am to 12.30 pm UK time.

Legal basis and next steps

The proposed Guidelines are based on Article 4(5) of the BRRD, which requires the EBA to issue guidelines in accordance with Article 16 of Regulation (EU) No 1093/2010 to specify the criteria referred to in Article 4(1) of the BRRD. The proposed draft ITS are based on Article 4(11) of the BRRD, which requires the EBA to develop draft implementing technical standards to specify uniform formats, templates and definitions for the identification and transmission of information by competent and resolution authorities to the EBA for the purposes of informing its report, pursuant to Article 4(7) of the BRRD, to the European Parliament, to the Council and to the Commission on the implementation of relevant provisions of Article 4 of the BRRD. The EBA shall identify in its report any divergences regarding the implementation of these provisions.

Press Release

EBA publishes technical standards and guidelines on simplified obligations

07 July 2015

The EBA published today its final Guidelines and final draft Implementing Technical Standards (ITS) relating to the eligibility of institutions for simplified obligations in the context of recovery planning, resolution planning and resolvability assessments under the Bank Recovery and Resolution Directive (BRRD). The EBA also issued final draft ITS on the procedures, forms and templates for submitting information on resolution plans under the BRRD. The work of the EBA aims at promoting a common EU framework for the application of simplified obligations, in line with the principle of proportionality, and to facilitate cooperation among EU authorities.

These Guidelines establish a set of indicators against which competent and resolution authorities should assess the impact of the failure of an institution to determine its eligibility for simplified obligations.

Competent authorities and resolution authorities will also be required to notify the EBA on the way they assessed institutions against the criteria set out in the BRRD, including the mandatory indicators specified in the Guidelines, and the nature of the simplified obligations applied to eligible institutions. The draft ITS includes a number of templates and definitions to be used by competent and resolution authorities for this purpose. The EBA will monitor any divergence of approach in the application of simplified obligations and will report accordingly to the European Parliament, the Council and the Commission by 31 December 2017.

Moreover, the ITS on procedures, forms and templates for the provision of information for resolution aim to harmonise the process for the submission of such information to resolution authorities and to facilitate the exchange of information between home and host resolution authorities during the resolution planning process for cross-border institutions and groups.

Legal basis and next steps

These ITS and Guidelines have been developed according to Articles 4(5), 4(7) and 11(3) of the BRRD.

The final draft ITS have been submitted to the European Commission for endorsement, following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union.

The guidelines will be translated into the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations. The guidelines will apply 2 months and 1 day after the publication of the translations.

Consultation Papers

Consultation on draft Guidelines on simplified obligations (EBA/CP/2014/25)

Summary 25/09/2014

The European Banking Authority (EBA) launched today a consultation on its draft Guidelines that define how EU authorities should assess whether an institution is eligible for simplified obligations. The EBA will monitor any divergence of approach in the application of simplified obligations and will report accordingly to the European Parliament, the Council and the Commission. The papers launched for consultation today are part of the EBA’s work to promote convergence of practices between competent and resolution authorities across the EU. These consultations run until 3 January 2015.

According to the BRRD, when determining the nature of the obligations imposed in relation to recovery planning, resolution planning and resolvability assessments for institutions, competent and resolution authorities across the EU should take into consideration the impact that the failure and subsequent winding up of an institution under normal insolvency proceedings could have on financial markets, other institutions, funding conditions, as well as on the wider economy. For this purpose, the BRRD details a series of criteria against which institutions should be assessed: the nature of the institution’s business, its shareholding structure, its legal form, its risk profile, size and legal status and its interconnectedness to other institutions or to the financial system in general.

Consultation process

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 3 January 2015.

Legal basis and next steps

Public Hearing

Note: A Public Hearing is related to this consultation but is not visible to public users since the date is past