On May 10, 2016, the European Commission adopted a Delegated Regulation outlining the regulatory technical standards on the elements of a business reorganization plan and the minimum contents for reporting progress in the implementation of the plan. The adopted Delegated Regulation will supplement the requirements set out in the Bank Recovery and Resolution Directive which requires a firm that has been bailed in to submit a plan to the resolution authority on how the firm, or parts of it, might be restored to long-term viability within a reasonable timescale.
The adopted RTS require a business reorganization plan to set out the firm's strategy for restoring viability, the projected financial performance of the firm and how it meet its prudential regulatory requirements on a going-forward basis and quarterly implementation milestones and performance indicators. The business reorganization plan must be also include information that will allow the national regulator and resolution authority to conduct a viability assessment of the proposed strategy for restoration.
BRRD also requires firms to submit progress reports to the resolution authority and national regulatory on the implementation of the plan. The RTS set out the required contents of a progress report. The report should outline the milestones that have been met, the measures that have been realized and the actual impact of measures taken compared with those envisaged as well as provide a performance comparison of the institution with the forecast in the business reorganization plan. If the firm has failed to meet milestones or has been delayed in doing so, the report should include reasons and proposals to remedy shortfalls. The report should also refer to any issues arising in the execution of the plan that may prevent restoration to long-term viability, upcoming measures and milestones and, if necessary, proposals for adjustments to milestones or performance indicators.
The RTS must still be considered by the European Parliament and the Council of the European Union before they can become final.
The RTS is available at: https://ec.europa.eu/transparency/regdoc/rep/3/2016/EN/3-2016-2665-EN-F1-1.PDF.
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