Review of the recovery plans of 23 European banking groups.
The European Banking Authority (EBA) has published the results of a review of the recovery plans of 23 European banking groups, with the parent banks located in 12 EU countries.
The EBA findings provide a valuable checklist of good practice against which banks can assess their own recovery options. European banks are required to produce recovery plans under the Bank Recovery and Resolution Directive (BRRD). The EBA has been undertaking a series of reviews of aspects of these plans – the latest review focuses on recovery options. The BRRD requires recovery plans to contain sufficient plausible and viable recovery options which make it reasonably likely that the bank would be able to counter different scenarios of financial distress quickly and effectively.
The EBA found that all the recovery plans reviewed provided a reasonably good overview of recovery options, with the number of recovery options ranging from 8 to 52 across the sample of banks. The most frequently included recovery options were (i) disposal of subsidiaries, (ii) sale of assets/loan portfolios, (iii) liquidity improvement measures and (iv) capital raising. Based on this sample of recovery plans, the EBA’s main concerns on recovery options were: