SRB publishes operational guidance on bank reorganisation plan analysis
The Single Resolution Board (SRB) has published operational guidance on Business Reorganisation Plan Analysis Reports (BRP ARs) for consultation. This guidance aims to ensure institutions can effectively prepare and implement reorganisation plans following the application of an open bank bail-in tool.
The capabilities for resolution readiness
The Single Resolution Board (SRB), in close cooperation with National Resolution Authorities, has issued operational guidance for institutions to develop and demonstrate their capabilities in preparing and implementing Business Reorganisation Plans (BRPs).
This guidance specifically addresses the application of the open bank bail-in (OBBI) tool, aiming to ensure that institutions can restore financial soundness and long-term viability post-bail-in.
The BRP Analysis Report (BRP AR) is expected to evidence operational capabilities, governance arrangements, and processes for timely BRP production.
It also requires a preliminary assessment of reorganisation capacities, including strategic views on target business models, geographical footprint, and internal organisation post-OBBI.
The guidance facilitates convergence towards high standards and compliance with the relevant legal framework, supporting the SRB's resolution testing objectives.
Implementing the bail-in tool
The OBBI tool is applied to recapitalise failing institutions, provided there is a reasonable prospect of restoring financial soundness and long-term viability.
Following a bail-in, the institution's management must submit a BRP within one month, outlining a detailed diagnosis of failure factors, measures to restore viability, and an implementation timetable.
This is governed by Article 52 BRRD and Commission Delegated Regulation (EU) 2016/1400, which sets out minimum BRP elements.
The SRB's Expectations for Banks (EfB) Principle 7.3 further requires institutions to conduct preliminary assessments of key BRP elements during the resolution planning phase to ensure readiness.
Clarity for complex resolution
This operational guidance provides crucial clarity for banks navigating complex resolution frameworks.
While seemingly technical, it underscores the SRB's proactive approach to enhancing resolvability and reducing systemic risk.
Effective implementation will be key to ensuring financial stability in future crises, moving beyond theoretical frameworks to practical readiness.