EU Comparative Report on Recovery Planning and Recovery Options Published

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The European Banking Authority published a comparative report on recovery planning by EU banks, focusing on recovery options. The Bank Recovery and Resolution Directive requires a bank to prepare recovery plans which set out the measures it could take to restore its financial position if it came under stress. The BRRD and secondary measures provide for the relevant information and detail that recovery plans should cover. The EBA compared the recovery plans of 23 European cross-border banking groups with parent institutions located across 12 different EU countries. The EBA's comparative analysis is intended to assist national regulators and banks in effectively preparing recovery plans. The EBA found that all the recovery plans in the sample provided a good overview of recovery options, and that where plans had previously been submitted, there had been improvements on financial impact analysis, possible interaction with the scenarios and assessment of credibility. However, the analysis also revealed areas where more work is needed. These included linking recovery options to governance by setting out detailed governance, decision-making and implementation for each option; and better coverage and integration of material legal entities. The report also recommends improvements as regards the information backing impact assessments, particularly the detail on which the calculations are based, operational impact and continuity, and whether operational continuity is warranted under each recovery option. The report also recommends including detailed information on the estimated timelines for implementation of each option so that an assessment could be made of whether the timelines are realistic.

View the report.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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