EBA Compliance Guidelines: FI Resolvability

EBA issued guidelines for financial institutions' resolvability. They provide a framework, self-assessment, multi-annual testing, and a master playbook for complex institutions. Translations on EBA site, compliance reporting within 2 months. Effective 1 Jan 2024.

EBA Compliance Guidelines: FI Resolvability
EU Resolvability Guidelines

Compliance improvements: Resolvability Framework

Source: European Banking Authority Keywords compliance Resolvability

The European Banking Authority (EBA) has issued guidelines to improve the resolvability of financial institutions and resolution authorities under Directive 2014/59/EU. These guidelines aim to provide a common framework for resolution authorities and institutions to achieve resolvability, including a self-assessment by resolution entities of their resolvability and the development of a multi-annual testing programme for each resolution entity. Additionally, the guidelines introduce a master playbook for the most complex institutions to ensure a holistic approach to resolution planning and overall coherence of their capabilities to execute the resolution strategy. The guidelines will be translated into the official EU languages and published on the EBA website, with a deadline of two months after the translations' publication for resolution authorities to report compliance. These guidelines will apply from 1 January 2024.




Bank Recovery and Resolution Directive: EBA Guidelines implications


The European Banking Authority (EBA) has recently issued guidelines to improve the resolvability of financial institutions and resolution authorities under Directive 2014/59/EU, also known as the Bank Recovery and Resolution Directive (BRRD). These amended guidelines aim to provide a more structured and harmonized approach to resolution planning across the European Union (EU), reducing discrepancies between institutions and authorities.

The implications of these guidelines for financial institutions and their future development are significant. Firstly, the guidelines will ensure a more consistent assessment and management of resolution risks, contributing to the stability of the financial sector. By providing a common framework for resolution authorities and institutions, the guidelines promote a holistic approach to resolution planning and ensure overall coherence in executing the resolution strategy.

One of the key features of the amended guidelines is the introduction of a self-assessment process, which encourages financial institutions to take ownership of their resolvability. This process will foster a proactive approach to resolution planning, leading to more effective strategies and improved crisis management capabilities. Additionally, the guidelines establish a multi-annual testing program that will enable resolution authorities to assess the preparedness of institutions, identify any gaps or weaknesses in resolvability capabilities, and take targeted action to address them. This will further enhance the stability of the financial sector.

Moreover, the guidelines introduce a master playbook specifically designed for the most complex institutions. This comprehensive and coherent approach to resolution planning helps mitigate potential systemic risks associated with the failure of large, complex institutions, ultimately contributing to the overall stability of the financial system.

To ensure compliance with Directive 2014/59/EU and the EBA guidelines, financial institutions need to adapt and implement appropriate measures. This may include conducting thorough self-assessments, developing robust resolution strategies, actively participating in the multi-annual testing program, and implementing the master playbook where applicable. Monitoring updates and translations of the guidelines on the EBA website will be crucial to staying informed and aligning practices with any new requirements.

In terms of timeline, the guidelines will be translated into the official EU languages and published on the EBA website. Resolution authorities will have a two-month deadline from the translations' publication to report compliance. The guidelines will officially apply from 1 January 2024, requiring financial institutions to ensure their resolvability practices align with the guidelines by this date.




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Bank Recovery and Resolution Directive (BRRD) - European Banking Authority




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