Consultation: Draft guidelines—Types of tests, reviews or exercises that may lead to support measures

Original news

Draft guidelines specifying conditions for extraordinary public support under the Bank Recovery and Resolution Directive (BRRD) have been set out for consultation by the European Banking Authority. BRRD identifies extraordinary public support as a factor indicating an institution is failing or likely to fail. However, this form of support should only trigger resolution in rare cases where the institution meets the conditions outlined in BRRD. Responses to the consultation must be received by 9 August 2014.

 Summary

The main objective of the BRRD is to avoid using taxpayes' money when dealing with unsound or failing credit institutions and investment firms. It sets out a harmonised framework for resolving institutions at EU level and establishes that a resolution should be exclusively financed by private resources.

The guidelines provide information on the conditions, including:

  • a timeline
  • a scope
  • a time horizon and reference date
  • a quality review process
  • a common methodology
  • a macro-economic scenario
  • hurdle rates
  • a timeframe to address the shortfall

Responses

Those wishing to comment can submit their responses by clicking on the 'send your comments' button on the consultation main page : EBA consultation

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