Regulatory Alerts2022-02-10
Implementation of revised EBA guidelines on indicators for recovery plans under the BRRD2 Directive (EBA/GL/2021/11)
The Prudential Supervision and Resolution Authority (ACPR) has declared conformity with the revised European Banking Authority (EBA) guidelines on recovery plan indicators under the BRRD2 Directive. These guidelines specify mandatory quantitative and qualitative indicators across four categories—equity, liquidity, profitability, and asset quality—plus macroeconomic and market indicators, which must be tailored to each institution's size, strategy, and risk profile. The updated version refines indicator calibration and reporting requirements based on experience since the 2015 publication to help institutions identify vulnerabilities and restore financial positions.
NOTICE Implementation of the revised guidelines of the European Banking Authority (EBA) regarding indicators for recovery plans under Directive (EU) 2014/59 known as 'BRRD2' (EBA/GL/2021/11)
The Prudential Supervision and Resolution Authority (ACPR) has declared conformity with the revised guidelines of the European Banking Authority (EBA/GL/2021/11) on indicators for recovery plans¹ under Directive (EU) 2014/59 (BRRD2).
The Prudential Supervision and Resolution Authority had previously declared conformity with these guidelines in their first version (EBA/GL/2015/02).
These guidelines specify, in particular, the quantitative and qualitative indicators that must appear in the preventive recovery plans of institutions; certain criteria must be included therein obligatorily. The EBA guidelines identify four categories of indicators that must be present in each preventive recovery plan: equity, liquidity, profitability, and asset quality. Two additional indicators must also be present: macroeconomic indicators and market indicators. The indicators must be adapted to institutions in terms of size and activity, but also strategy and risk. They must enable the identification of the most likely vulnerabilities likely to impact the financial situation of the institution, ensuring that it can take appropriate measures in a timely manner to restore its financial position after a significant deterioration.
This new version of the guidelines aims primarily to leverage the experience gained since the entry into application of the previous version of the guidelines published in 2015, to refine the calibration of indicators, to clarify the actions and notifications of institutions in the event of exceeding an indicator, and to review the list of minimum indicators to make it more relevant.
These guidelines apply to credit institutions, financing companies, and investment firms subject to the submission of a preventive recovery plan, which must do everything in their power to comply with them, in accordance with the provisions of Article 16 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing the European Banking Authority.
1 Designated in the Monetary and Financial Code under the name 'preventive recovery plans'.