On May 20, EBA issued report on the interlinkages between plans.
EBA published report on interlinkages between recovery and resolution planning.
Report assessed interlinkages between rec and res planning under BRRD Directive, aim to enhance unity between two phases, ensure consistency in potential implementation.
Rec and Res Plans
Recovery plans set out the framework and specific actions an institution itself can take to recover from a severe stress situation and to be able to continue as going concern.
Resolution plans, which provide for the resolution actions that the resolution authority (RA) may take where the institution meets all the conditions for a resolution.
Although separate under BRRD, rec and res planning could be seen as a continuum.
Crucial to maximize synergies, ensure a smooth transition from one phase to another.
Report identified best practices and areas where further improvement and/or clarifications needed, clarified specific common elements between both types of plans such as critical functions and access to central bank facilities, and specific purposes.
Report also analyzed potential impact of recovery options on a firms' resolvability.
Introduced assessment framework to support assessment and consultation process between resolution and competent authorities, and accompanied by two annexes.
First annex has template for comparison of sample recovery and resolution plans.
Second annex is a practical tool to help resolution authorities in conducting their analysis of the potential impact of recovery options on the institution’s resolvability.
Some interlinkages have been observed between recovery and resolution plans.
Various common elements in which recovery, resolution plans show high consistency.
Some good practices include incorporation in plans of clear and reasoned explanations of divergences between the documents and organizing workshops for the institution.
Progress needed in terms of assessing potential implications of recovery options on institutions’ resolvability or usage in the post-stabilization phase in resolution plans.
Bank; Corp; Depo; Exch
PR, Rp EBA/Rep/2020/16, 5/20/2020; BRRD Dir 2014/59