Decision on the content and the manner of assessment of the reorganization plan and on the content of the reports on its implementation

Pursuant to Article 47 paragraph 1 item 6 of the Law on the National Bank of the Republic of Macedonia (Official Gazette of the Republic of Macedonia No. 158/10, 123/12, 43/14, 153/15, 6/16 and 83/18 and Official Gazette of the Republic of North Macedonia No. 110/21, 74/24 and 16/25) and Article 40 paragraph 14 of the Bank Resolution Law (Official Gazette of the Republic of North Macedonia No. 209/23), the National Bank of the Republic of North Macedonia Council has adopted the following DECISION on the content and the manner of assessment of the reorganization plan and on the content of the reports on its implementation (Official Gazette of the Republic of North Macedonia No. 71/25)
I. GENERAL PROVISIONS

1. This Decision shall prescribe:
   − the content of the reorganization plan of the operation of the bank which is subject to application of the bail-in tool; − the manner of assessment of the reorganization plan for the purposes of its approval and − the content of the reports on the implementation of the reorganization plan submitted to the National Bank of the Republic of North Macedonia (hereinafter: the National Bank).
2. The provisions of this Decision that apply to a bank shall apply accordingly to other
   entities to whom the Bank Resolution Law (hereinafter: the Law) applies, unless otherwise determined by this Decision.
3. Certain terms used in this Decision shall denote the following:
   3.1. "Persons competent for the plan" shall denote the Management Board of the
   bank under resolution or the persons appointed by the National Bank to exercise the power under Article 59 paragraph (1) of the Law, who prepare the reorganization plan in accordance with Article 40 of the Law;
   3.2. "Reorganization measures" shall denote the measures that need to be taken
   to restore the long-term viability of the bank under resolution or part of its activities, i.e. business lines;
   3.3. "Restoration of the long-term viability of the bank" shall denote ensuring
   the long-term sustainability of the bank no later than the end of the reorganization period, which implies that the bank has a business model that is long-term sustainable and that the bank will be able to meet the requirements for capital adequacy ratios and other supervisory standards prescribed by the Banking Law and the by-laws adopted on the basis of this Law, including the internal capital determined in accordance with the National Bank's regulation on the methodology for risk management;

3.4. "Baseline scenario" shall denote the scenario that the persons competent for
the plan consider as most likely to occur during the restoration of the long-term viability of the bank.
3.5. "Reorganization period" shall denote the period during which the
reorganization measures included in the reorganization plan are implemented after the application of the bail-in tool until the restoration of the long-term viability of the bank. The other terms used in this Decision, shall have the meaning of the terminology defined in the Bank Resolution Law and the Banking Law and the by-laws adopted on the basis of these laws.
II. CONTENT OF THE REORGANIZATION PLAN
4. The reorganization plan (hereinafter: the plan) shall contain the elements
prescribed in Article 40 paragraph (5) of the Law, i.e. it contains:
4.1. A detailed assessment of the factors, problems and conditions due to which the
bank under resolution meets the conditions under Article 19 paragraph (1) item 1) of the Law, which includes:
− a description of the reasons that contributed to the deterioration in the bank's operations and the initiation of the resolution procedure, including the reasons that led to the deterioration of financial indicators before the initiation of the resolution procedure, − a brief description of the crisis prevention and crisis management measures, if such measures were taken by a competent resolution authority or a competent supervisory authority or by the bank, prior to the preparation of the plan;
4.2. A description of the measures that need to be taken to restore the long-term
viability of the bank, including:
− a description of the strategy and the reorganization measures, taking into account the provisions of items 5, 6and 7of this Decision, − projections for the bank's financial operations during the reorganization period and the manner in which the restoration of the long-term viability of the bank is planned, taking into account the provisions of item 8of this Decision, − the measures that will be taken by the bank under resolution to ensure compliance with the regulatory requirements as quickly as possible, and at the latest by the end of the reorganization period, including the minimum requirements for own funds and eligible liabilities, in accordance with the Law, − the data related to the sustainability of the measures taken, considering the provisions of items 9and 10of this Decision;
4.3. Dynamics/time frame for the implementation of the reorganization measures,
which implies defining quarterly dynamics of the plan implementation by determining the key stages of the reorganization and the key financial indicators and the relevant levels of those indicators that should be reached in the individual stages of the reorganization. The dynamics and financial indicators may be subject to adjustment in accordance with item 11of this Decision.

Strategy and reorganization measures of the bank's operations
5. The strategy and reorganization measures of the bank's operations should
determine the manner in which the restoration of the long-term viability of the bank under resolution is planned during the reorganization period, which includes:
− reorganization of the business model;
− measures for implementing the reorganization strategy of a separate business line, the bank or the group; − planned duration of the reorganization and the separate key phases of the implementation of the reorganization; − manner of cooperation with the National Bank as the competent resolution authority and as the competent supervisory authority; − the manner of involving outsourcing entities in the reorganization process of the bank's operations, if necessary, and − the communication plan within the bank and with the public regarding the reorganization measures.
6. If it is planned to sell or close business lines or parts of the bank, the reorganization
strategy should determine:
− the business lines or parts, the procedure for their closure or sale; − the expected time frame for implementing the closing or sale; − the forms of financing or services that will continue to be provided or rendered by or to the bank. The effect of the sale under paragraph 1 of this item should be based on conservative assumptions, by applying comparable reference values, generally accepted valuation methodologies, such as a valuation carried out by an audit company or authorized valuer, market research or the value of a similar business line, considering the probability of loss. For the business lines or parts of the bank that will continue to be carried out, i.e. will operate, the plan should include the ways to remedy the possible shortcomings in the operations that could affect the long-term sustainability of the bank, even if these shortcomings are not directly related to the fulfilment of the conditions under Article 19 paragraph (2) of the Law.
7. The measures set out in the plan should consider the strengths and weaknesses of
the bank and its reorganized business model in relation to the macroeconomic and market environment in which it operates. The plan may also include the measures that were previously provided for in the recovery plan or in the bank resolution plan, if those measures are applicable after the bank is resolved. The National Bank shall not be obliged to submit the resolution plan to the persons competent for the plan. Projections for financial operations
8. The projections for the bank's financial operations during the reorganization period
shall determine at least:

− the costs and impact of the reorganization on the bank's income statement and balance sheet of the bank; − a description of the funding needs during the reorganization period and possible sources of funding; − the manner of the bank's operations that will ensure coverage of all costs, but also ensure adequate returns until the end of the reorganization period; − post-resolution balance sheet of the bank, which reflects the new structure of the bank's liabilities and capital, as well as the write-down of assets based on the provisional valuation of the bank's assets and liabilities or the additional final valuation of the bank's assets and liabilities, carried out in accordance with the Law; − the projection of key financial indicators, especially liquidity indicators, asset quality, financing, profitability and efficiency. Sustainability of the measures taken
9. The plan should contain sufficient information to enable the National Bank to assess
the sustainability of the proposed measures and the impact of the reorganization on the critical functions of the bank, as well as on financial stability, in accordance with item 14of this Decision.
10. For the purposes of item 9 of this Decision, the plan should contain:
10.1. A short presentation of the baseline scenario with an explanation of why the
reorganization measures provided for in the plan were chosen;
10.2. A short presentation of alternative scenarios with optimistic and conservative
assumptions compared to the baseline scenario, whereby the restoration of the long-term viability of the bank should be possible in all scenarios, with differences in individual scenarios regarding the reorganization period, reorganization measures and financial indicators. For the purposes of the baseline scenario and the scenarios under paragraph 1, sub￾item 10.2of this item, the plan should contain a presentation of the most significant information considered in the preparation of the individual scenarios, as well as the bank's performance in each of those scenarios, which includes:
− key assumptions (e.g. key macroeconomic variables); − projection of the balance sheet and income statement; − key financial indicators at the level of the business line, bank and group.
11. The plan should provide the persons comptetent for the plan with the possibility
to adjust the reorganization strategy or individual measures in cases where their further implementation is no longer expected to contribute to the restoration of the long-term viability of the bank, within the planned reorganization period. The persons competent for the plan shall be obliged to notify the National Bank of the necessary adjustments under paragraph 1 of this item, by submitting reports on the implementation of the reorganization plan within the deadlines specified in item 21 paragraph 2 and item 22of this Decision. If urgent notification to the National Bank is required, the persons competent for the plan may submit the reports under item 21paragraph 1 of this Decision within other deadlines than those provided in item 21paragraph 2 of this Decision.

The persons competent for the plan may not implement the adjustments under paragraph 1 of this item without requesting and receiving approval from the National Bank, under Article 40 of the Law.
III. MANNER OF ASSESSMENT OF THE REORGANIZATION PLAN
12. Within the deadlines prescribed by the Law, the National Bank shall assesse the
submitted plan from the perspective of the likelihood that its implementation will enable the restoration of the long-term viability of the bank. The assessment under paragraph 1 of this item shall include at least the following criteria:
− the readiness to implement the plan, considering the requirements of item 13of this Decision; − the sustainability of the plan assessed in accordance with items 14and 15of this Decision; − the adequacy of the proposed strategy and reorganization measures, assessed in accordance with item 16of this Decision; − the compliance of the plan with other plans of the bank, taking into account the requirements of item 17of this Decision and − the possibility of efficient monitoring of the plan and control of its implementation assessed in accordance with items 18and 19of this Decision. Readiness to implement the plan
13. The persons competent for the plan shall be considered prepared for its
implementation if the plan shows that those persons:
− support the plan and are prepared to ensure its implementation; − have designated one or more organizational units within the bank for the implementation of the plan and a person(s) responsible for the operation of the organizational unit(s); − have ensured efficient cooperation and support from all stakeholders. Sustainability of the plan
14. The submitted plan shall be considered sustainable if:
14.1. There is a high level of certainty that the implementation of the plan will enable
the long-term viability of the bank, which implies that the plan should be based on realistic assumptions, scenarios and relevant financial indicators that are determined at the level of the business lines, the bank or the group. Thus, the assumptions, scenarios and financial indicators should be adjusted to macroeconomic and market movements;
14.2. It provides a description of the manner in which the bank will ensure an adequate
return after the end of the reorganization period, taking into account the performances of other banks of similar size and business model, as well as historical data on the return achieved by the bank;

14.3. The risks that are expected to arise during the implementation of the plan have
been adequately identified, taking into account the risks identified by the National Bank or other competent authorities;
14.4. The more conservative scenario in item 10paragraph 1 sub-item 10.2of this
Decision is based on assumptions that are sufficiently extreme, but theoretically feasible, but which are also specific to the bank. The restoration of the long-term viability of the bank, even in such a scenario, should not include the additional application of resolution tools that were not applied at the time of preparation of the plan, nor should it cause major impediments to the resolvability of the bank. If the National Bank determines that the plan may cause major impediments to the resolvability of the bank, it will request from the bank to revise the plan, in accordance with the Law, specifying the activities that should be undertaken to remove the identified impediments.
14.5. The bank can meet the internal capital requirements in accordance with the
National Bank's regulation on the methodology for risk management. In doing so, the National Bank takes into account the criteria for assessing the bank's business model, i.e. the nature, type and volume of the financial activities carried out by the bank and the risks to which it is or may be exposed as a result of those activities, including the risks arising from the macroeconomic environment.
15. The reorganization strategy should be in accordance with the objectives and
principles of resolution set out in the Law, with particular regard to the impact of the strategy and reorganization measures on the bank’s critical functions, the functioning of the financial system and the maintenance of financial stability. Adequacy of the strategy and reorganization measures
16. The proposed strategy and reorganization measures shall be considered relevant
if:
16.1. The information included in the plan regarding the reasons that contributed to
the initiation of the resolution procedure is consistent with the reasons determined by the National Bank as the competent resolution authority and as the competent supervisory authority, as well as with the valuation for resolution purposes carried out in accordance with the Law;
16.2. The analysis of the macroeconomic and market environment included in the plan
is consistent with the relevant analyses made by the National Bank when carring out its tasks;
16.3. The plan is feasible and realistic, which implies that:
− when identifying the measures in the plan, the potential impediments for the implementation of those measures have been taken into consideration, such as impediments that could arise from regulations governing labor relations or other obligations under contractual law, − the strategy, measures, key stages and key financial indicators included in the plan take into account financial interdependencies within the banking group, − the strategy, measures, key stages and key financial indicators included in the plan considering the situation in the markets in which the bank or group is present, − the divestment of the bank's assets, its business lines or the sale of group members

envisaged by the plan are in accordance with the situation in the markets in which the bank or group is present and the existence and interest of potential buyers, − the reference values or valuation used for determining expected sales revenues are conservative, realistic and can be confirmed;
16.4. The length of the reorganization period corresponds to:
− the need to allow sufficient time for the efficient implementation of the strategy and reorganization measures in order to restore the long-term viability of the bank, − the standards and practices present in the relevant markets, − the need to maintain financial stability. Compliance of the plan
17. The plan should be consistent with other plans that the bank has prepared in
accordance with the law.
If the plan includes measures that were determined by the recovery plan or the bank resolution plan, those measures should be limited to those that are applicable after the bank resolution, considering the situation in the markets where the bank or group is present. Possibility of efficient monitoring of the plan and control of its implementation
18. The plan can be effectively monitored and its implementation can be controlled if
there is:
18.1. Clarity and precision of key phases and key financial indicators in terms of the
possibility of their regular monitoring through the reporting under Chapter 0of this Decision;
18.2. Possibility, through the content of the plan and the report on the implementation
of the plan under item 21of this Decision, to assess whether the plan is being implemented in accordance with the plan and whether it will enable the achievement of the planned goals;
19. The National Bank may request from the bank to carry out relevant activities to
monitor the plan, especially in relation to timely information regarding the implementation of the plan. If the National Bank engages an outsourcing entity for full or partial verifications of the assumptions and the impact of the measures provided for in the plan, that person should meet the requirements for the independence of the valuer in accordance with the Law and the by-laws adopted on the basis of this Law.
IV. COOPERATION BETWEEN THE NATIONAL BANK AND OTHER COMPETENT
AUTHORITIES
20. The National Bank, prior to approving the plan for a bank that is part of a group,
may submit the plan to other resolution authorities, if it has established cooperation with those authorities, and/or submit the plan to the resolution board in the case where the board is chaired by the competent authority for the group.

V. CONTENT OF THE REPORTS SUBMITTED TO THE NATIONAL BANK
21. The report on the implementation of the plan submitted to the National Bank in
accordance with the Law shall include an analysis and assessment of the implementation of the plan, covering at least:
− the achievement of key phases and measures and the comparison of their impact with the impact foreseen in the plan; − the level of the bank's key financial indicators and the comparison with the levels foreseen in the plan, but also with the levels from previous reports on the implementation of the plan; − the reasons for the non-achievement of key stages or key financial indicators, if they have not been achived, and proposals for overcoming delays or deficiencies; − other difficulties related to the implementation of the plan that could prevent the restoration of the long-term viability of the bank; − the measures to be taken in the next key stages, as well as the assessment of the probability of their realization; − updated projections of financial results; − the proposal for adjustment of individual measures, key stages or key financial indicators, in accordance with item 11paragraphs 1 and 2 of this Decision, if necessary and justified. The persons competent for the plan shall submit the report referred to in paragraph 1 of this item on a semi-annual basis, as follows:
−as of 31 December, no later than 15 February of the following year, and −as of 30 June, no later than 15 August.
22. At the special request of the National Bank, the persons competent for the plan
shall be obliged to prepare the report under item 21paragraph 1 of this Decision, with a date on another day and within another deadline that are different from the dates and deadlines specified in item 21paragraph 2 of this Decision.
23. The National Bank may at any time request the submission of other data and
information related to the implementation of the plan from the persons competent for the plan. In the request referred to in paragraph 1 of this item, the National Bank shall indicate the deadline for submitting the requested data and information.
VI. FINAL PROVISIONS
24. This Decision shall enter into force on the eighth day from the date of its
publication in the Official Gazette of the Republic of North Macedonia, and shall be applied from 13 October 2025. D. No. 02/10864/8 Governor and Chairman 27 March 2025 of the Council of the National Bank Skopje of the Republic of North Macedonia Anita Angelovska-Bezhoska