Provisions on Recovery Plans

1. Preamble

The provisions of the Banking Act Consolidated Text (“TUB”), Title IV, Chapter 01-I, and the Consolidated Text of Financial Intermediation (“TUF”), Title IV, Chapter I-bis, regulate the obligations of banks, SIMs, and parent companies of banking or SIM groups to adopt individual or group recovery plans.

These provisions are supplemented by Delegated Regulation (EU) No 2016/1075 and Delegated Regulation (EU) No 2019/348 (1), as well as by the Recommendation on the treatment of entities in a group recovery plan (EBA/REC/2017/02), and by the Guidelines issued by the European Banking Authority on the minimum list of qualitative and quantitative indicators for recovery plans (EBA/GL/2021/11) and on the set of scenarios to be used in recovery plans (EBA/GL/2014/06).

By this measure, adopted pursuant to Articles 69-quater, 69-quinquies, 69-decies, and 69-undecies of the TUB and Articles 55-bis and 55-ter of the TUF, the Bank of Italy issues implementing provisions for Title IV, Chapter 01-I of the TUB and Title IV, Chapter I-bis of the TUF regarding the definition of the minimum content of recovery plans and the provision of simplified drafting methods for them.

2. Definitions

For the purposes of these provisions, the following are defined:

• “SIM”: SIMs as referred to in Article 55-bis of the TUF;
• “entity”: banks or SIMs;
• “significant banks”: banks and parent companies of banking groups subject to direct supervision by the ECB pursuant to Regulation (EU) No 1024/2013 (“SSM Regulation”);
• “less significant banks”: banks and parent companies of banking groups subject to direct supervision by the Bank of Italy pursuant to the SSM Regulation;
• “Supervisory Authority”: depending on the case, the ECB or the Bank of Italy, in harmony with the division of competences provided for under the SSM Regulation;
• “Delegated Regulation”: Delegated Regulation (EU) No 2019/348, which specifies the criteria for assessing the impact of an entity’s failure on financial markets, other entities, and financing conditions.

(1) Which repeals EBA/GL/2015/16 “Guidelines on the application of simplified obligations under Article 4(5) of Directive 2014/59/EU”.

3. Scope of Application

These provisions apply:

• on an individual basis: to banks and SIMs required to draw up individual recovery plans pursuant to Article 69-quater of the TUB and Article 55-ter of the TUF (2);
• on a consolidated basis: to parent companies of banking groups and parent companies of SIM groups required to draw up group recovery plans pursuant to Article 69-quinquies of the TUB and Article 55-ter of the TUF (3).

4. Administrative Procedures

The following administrative procedures relating to Title IV, Chapter 01-I of the TUB and Title IV, Chapter I-bis of the TUF are indicated below:

• request to draw up an individual recovery plan pursuant to Article 69-quater, paragraph 2, TUB (deadline: 90 days);
• request to draw up a group recovery plan pursuant to Article 69-quinquies, paragraph 2, TUB (deadline: 90 days);
• measures pursuant to Article 69-sexies, paragraph 3, TUB (deadline: 90 days);
• measures pursuant to Article 69-decies TUB (deadline: 60 days).

5. Ordinary Methods of Fulfilling Obligations Regarding Recovery Plans

Banks and SIMs required to draw up a recovery plan, individual or group, shall proceed to its drafting in conformity with what is provided for by the TUB, the TUF, Delegated Regulation (EU) No 2016/1075, as well as by the Recommendation on the treatment of entities in a group recovery plan (EBA/REC/2017/02) and by the Guidelines of the European Banking Authority on the minimum list of qualitative and quantitative indicators for recovery plans (EBA/GL/2021/11) and on the set of scenarios to be used in recovery plans (EBA/GL/2014/06).

The recovery plan includes all information necessary to demonstrate the suitability of recovery options to rebalance the financial and asset situation of the entity or group in the event of its significant deterioration. Full coherence of the content of the recovery plan with the business model and characteristics of the entity or group must be ensured, as well as with what is represented in the risk appetite framework (RAF) where present, and in the Internal Capital Adequacy Assessment Process (ICAAP) and the system for governance and management of liquidity risk (ILAAP).

This paragraph does not apply to banks and SIMs for which the Supervisory Authority has provided for the possibility of adopting recovery plans in simplified form.

6. Recovery Plans in Simplified Form

The minimum informational content of simplified plans conforms to the scheme provided in Annex A and includes all information necessary to demonstrate the suitability of recovery options to rebalance the financial and asset situation of the entity or group in the event of its significant deterioration. Full coherence of the content of the recovery plan with the business model and characteristics of the entity or group must be ensured, as well as with what is represented in the risk appetite framework (RAF) where present, and in the Internal Capital Adequacy Assessment Process (ICAAP) and the system for governance and management of liquidity risk (ILAAP).

Subject to what is provided for in the following paragraph, the following may adopt recovery plans in simplified form (4):

• less significant banks for which, pursuant to the Delegated Regulation, a quantitative score lower than the threshold of 0.25% results (5);
• SIMs for which the quantitative score calculated on the basis of the four indicators referred to in Annex II of the Delegated Regulation, each weighted at 25%, results lower than the threshold of 14.3% (6).

In application of Articles 2 and 4 of the Delegated Regulation, in any case the following cannot adopt recovery plans in simplified form:

a) less significant banks to which the qualification of high-impact established by the ECB is communicated (7); b) other less significant banks and SIMs for which the Bank of Italy, in application of the other qualitative criteria provided for in Articles 2 and 4 of the Delegated Regulation, establishes by specific measure the likely significance of the impact of the failure.

The less significant banks and SIMs referred to in letters a) and b) draw up their recovery plans according to ordinary methods (see para. 5).

By January 15 of each year, the Bank of Italy communicates to the interested entities:

• their respective quantitative score when higher than the threshold provided for by these provisions and the consequent obligation to draw up recovery plans according to ordinary methods:
• the adoption of the measures referred to in letter b);
• the possible cessation of the condition of likely significance of the impact of the failure and the consequent extinction of the obligation to draw up recovery plans according to ordinary methods.

(4) For significant banks, the possibility of adopting recovery plans in simplified form is determined by the ECB. (5) Article 1, paragraph 2 of the Delegated Regulation. The quantitative score is determined annually based on the latest FINREP reports available as of December 31. (6) Article 3, paragraphs 1 and 3 of the Delegated Regulation. The quantitative score is determined annually based on the latest FINREP reports available as of December 31. (7) The communication is made by the Bank of Italy by January 15 of each year.

7. Communication and Review Obligations

Recovery plans are reviewed and, if necessary, updated:

a) on an annual basis, by banks and SIMs required to draw up recovery plans according to ordinary methods; b) on a biennial basis, by banks and SIMs that have adopted recovery plans in simplified form.

The updated recovery plan, or the attestation that it does not require updating, is transmitted to the Supervisory Authority by April 30 of the year in which the review is carried out.

Banks and SIMs equipped with recovery plans in simplified form for which the Supervisory Authority subsequently determines the need, pursuant to the Delegated Regulation and these provisions, to adopt a recovery plan in ordinary form, transmit the updated plan to the same within 120 days from the date on which the obligation to draw up the plan according to ordinary methods is communicated.

The obligation to proceed to the review and possible update of the plan in any case of significant change in the legal or organizational structure, or in the financial or asset situation of the entity or group, remains. In these cases, the updated plan is transmitted promptly to the Supervisory Authority.

8. Entry into Force

These provisions enter into force the day following publication on the website of the Bank of Italy.

THE GOVERNOR

Resolution 55/2022

Signature 1