2016年-EBA欧洲银行管理局_EBA_BS_2016_Comparative_report_on_RP_governance_and_indicators_July_2016_34页_688kb

EBA Recovery Planning Comparative Report Summary

Core Content

This report, published by the European Banking Authority (EBA) on 05 July 2016, is a comparative analysis of governance arrangements and recovery indicators in the recovery plans of 26 European cross-border banking groups. It follows previous analyses on core business lines and scenario testing, aiming to support supervisors and resolution authorities in evaluating the credibility and effectiveness of recovery planning practices.

Main Viewpoints

• Recovery planning has become a key component of European banking groups' risk management, following the implementation of the Bank Recovery and Resolution Directive (BRRD) in January 2015.
• The governance arrangements are essential for ensuring the credibility and feasibility of recovery plans. These include the development, approval, and update processes, as well as the involvement of local management.
• Recovery indicators are crucial for early detection of financial distress and for triggering recovery actions. They should be calibrated consistently with regulatory requirements and include a broad range of categories.
• Integration of recovery plans into the overall risk management framework is necessary to ensure alignment with internal processes and to maintain the plan's relevance in dynamic environments.

Key Information

1. Governance – Recovery Plan Development, Update and Structure

1.1 Recovery Plan Development

• Most recovery plans included a detailed description of the development process and the roles of responsible persons.
• Over half of the plans provided clear and sufficient details on development and roles.
• A minority (19%) lacked clarity or did not specify roles or processes.
• Some banks referenced internal procedures without detailing the development process.

1.2 Approval of the Recovery Plan

• Nearly all recovery plans were approved by the Board of Directors of the parent entity.
• Half of the banks had their recovery plans reviewed by an internal audit function.
• A few banks required endorsement by the Audit Committee or external auditors.
• The approval process was generally well-documented, though not all plans provided comprehensive details.

1.3 Involvement of Local Management

• Only 38% of recovery plans explicitly mentioned the involvement of local management in preparing and updating the group plan.
• Most plans did not provide sufficient detail on this cooperation, limiting the effectiveness of the group recovery plan.
• Some banks involved local Boards and Crisis Management Officers in the development of recovery indicators, options, and scenarios.

2. Recovery Plan Update

2.1 Regular Updates

• Most banks updated their recovery plans annually.
• A few had bi-annual updates.
• Some plans included detailed timing for updating specific sections, aligning with internal procedures and regulatory changes.
• Additional elements such as scenario relevance, alignment with risk appetite frameworks, and feedback from competent authorities were often considered.

2.2 Ad Hoc Updates

• Approximately 20% of recovery plans included specific rules for ad hoc updates.
• These rules outlined cases requiring immediate revisions and dedicated procedures for such updates.
• Ad hoc events included changes in strategy, legal structure, financial instruments, and supervisory legislation.

2.3 Best Practices

• Two banks conducted Dry Run/simulation exercises to test their recovery plans and identify areas for improvement.
• These exercises were used to evaluate governance arrangements and communication procedures, particularly focusing on escalation processes.

3. Structure of the Recovery Plan

• The BRRD and EBA technical standards do not impose strict structural requirements but encourage grouping of information under five headings: summary, governance, strategic analysis, communication plan, and preparatory measures.
• The structure of the recovery plan significantly influences its ability to meet the BRRD requirements, especially in terms of entity coverage and recovery option consistency.
• Most group recovery plans (75%) were structured as a single document for the entire group, though some included separate documents for individual entities.

4. Recovery Indicators

• The scope of recovery indicators is broad, including capital, liquidity, asset quality, profitability, market-based, and macroeconomic indicators.
• Many institutions focused on capital and liquidity indicators, often treating other categories as early warning signals (EWS) rather than active triggers for recovery escalation.
• Calibration of indicators remains a challenge, particularly in setting thresholds for capital ratios and ensuring consistency with SREP and regulatory requirements.
• The traffic light approach was used by some institutions to signal the severity of breaches and the need for recovery actions.
• Individual-level indicators were not widely used, which limits the ability to detect early signs of distress at the local level.

Conclusions

• The EBA identified clear improvements in governance arrangements and recovery indicators across the sample of recovery plans.
• However, several areas require further attention, including the involvement of local management, the calibration of indicators, and the coverage of material legal entities.
• A comprehensive and well-calibrated framework of recovery indicators is essential for ensuring the timely and effective activation of recovery plans.
• The integration of recovery plans into the overall risk management framework enhances their credibility and supports resolution planning.