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Recovery and Resolution Planning

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Abstract

Prevention is the most important and innovative aspect of the new European framework for regulating banking crises.

This chapter analyses the main substantive and procedural aspects regarding the creation and approval of recovery and resolution plans under the Bank Recovery and Resolution Directive (BRRD). It also aims to highlight the importance of planning as a governance tool. “Recovery plans” can play a key role in improving corporate governance structures and promoting the development of a new risk management culture.

For recovery and resolution plans to be credible, the planned measures must be able to ensure orderly bank resolution and safeguard the stability of the system. A further aim of this chapter will therefore be to understand how these difficulties can be realistically overcome.

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Notes

  1. 1.

    The simultaneous presence of several instruments and options to overcome the crisis or the pre-crisis phase represents an obligatory point of anchorage, considering that in a sector like banking, where “the stakeholders are numerous, differentiated, and bearers of appreciably unequal interests” (see Micossi, Bruzzone, Cassella 2016), distinguishing between the areas (or rather, the levels) where interventions are performed undoubtedly makes it possible to provide greater protection for the different types of interests involved.

  2. 2.

    Articles 5 and 7 BRRD.

  3. 3.

    Articles 6 and 8 BRRD.

  4. 4.

    Articles 10–11 BRRD.

  5. 5.

    Articles 12–13 BRRD.

  6. 6.

    This includes technical instructions issued by the EBA, specifically relating to quantitative and qualitative indicators (EBA/GL/2015/02), scenarios to be employed in stress tests (EBA/GL/2014/06), provisions on simplified obligations (EBA/GL/2015/16), and recommendations on the treatment of institutions in a group recovery plan (EBA/REC/2018/02).

  7. 7.

    Repealing Implementing Regulation (EU) 2016/1066.

  8. 8.

    The key elements and essentials to be addressed in a recovery plan were presented for the first time in a discussion paper published by the EBA, the [EBA (15 May 2012), Discussion Paper on a template for recovery plans], in line with the key attributes published by the FSB in the same year [FSB (October 2011), Key Attributes of Effective Resolution Regimes for Financial Institutions, available at URL http://www.financialstabilityboard.org/publications/r_111104cc.pdf.; FSB (November 2012), Recovery and Resolution Planning: Making the Key Attributes Requirements Operational Consultative Document]. To this end, a possible “recovery plan model” was also included (EBF (December 2010), Positioning in respect of the European Commission’s communication on An EU Framework for Crisis Management in the Financial Sector, Brussels; EBA (11 March 2013a), Consultation Paper on Draft Regulatory Technical Standards on the content of recovery plans, EBA/CP/2013/01; EBA (20 March 2013b), Consultation Paper on Draft Regulatory Technical Standards on the assessment of recovery plans, EBA/CP/2013/08; EBA (20 May 2013c), Consultation Paper on Draft Regulatory Technical Standards on the range of scenarios to be used in recovery plans EBA/CP/2013/09)].

  9. 9.

    See EBA (18 July 2014a), Guidelines on the range of scenarios to be used in recovery plans (EBA/GL/2014/06).

  10. 10.

    See FSB (16 July 2013), Paper Guidance on Identification of Critical Functions and Critical Shared Services; EBA (6 March 2015a), Comparative report on the approach to determining critical functions and core business lines in recovery plans.

  11. 11.

    See Article 74 of the CRDIV.

  12. 12.

    Article 5, BRRD.

  13. 13.

    See Articles 8, 10 and 11 and Recital 15 of Regulation 1075/2016.

  14. 14.

    EBA (1 March 2017), Recovery Planning—Comparative Report On Recovery Options.

  15. 15.

    Article 10, para. 3, BRRD.

  16. 16.

    Article 6, para. 4, BRRD.

  17. 17.

    Article 10, para. 7, BRRD.

  18. 18.

    See Article 129 CRDIV.

  19. 19.

    Article 7, para. 1, BRRD.

  20. 20.

    Article 7, para. 2, BRRD.

  21. 21.

    See EBA (26 January 2018), Recommendation on the coverage of entities in a group recovery plan, EBA/REC/2018/02.

  22. 22.

    Article 8, para. 1, BRRD.

  23. 23.

    Article 8, para. 3, BRRD.

  24. 24.

    Article 8, para. 2, BRRD.

  25. 25.

    See also Chap. 13, 3, 3.1.

  26. 26.

    See FSB (2011), Key Attributes of Effective Resolution Regimes for Financial Institutions, October, available at URL http://www.financialstabilityboard.org/publications/r_111104cc.pdf.

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Author information

Authors and Affiliations

  1. University of Naples, Naples, Italy

    Marilena Rispoli Farina & Luigi Scipione

Authors
  1. Marilena Rispoli Farina
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  2. Luigi Scipione
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Editors and Affiliations

  1. Emeritus Professor of Administrative Law, University of Florence, Firenze, Italy

    Mario P. Chiti

  2. Jean Monnet Chair ad personam of European Administrative Law, University of Florence, Firenze, Italy

    Mario P. Chiti

  3. Professor of Business Law, University of Siena, Siena, Italy

    Vittorio Santoro

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Farina, M.R., Scipione, L. (2019). Recovery and Resolution Planning. In: Chiti, M.P., Santoro, V. (eds) The Palgrave Handbook of European Banking Union Law. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-13475-4_12

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  • DOI: https://doi.org/10.1007/978-3-030-13475-4_12

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