Annexes to COM(2012)280 - Framework for the recovery and resolution of credit institutions and investment firms - Main contents
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| dossier | COM(2012)280 - Framework for the recovery and resolution of credit institutions and investment firms. |
|---|---|
| document | COM(2012)280  |
| date | May 15, 2014 |
SECTION A
Information to be included in recovery plans
The recovery plan shall include the following information:
| (1) | A summary of the key elements of the plan and a summary of overall recovery capacity; |
| (2) | a summary of the material changes to the institution since the most recently filed recovery plan; |
| (3) | a communication and disclosure plan outlining how the firm intends to manage any potentially negative market reactions; |
| (4) | a range of capital and liquidity actions required to maintain or restore the viability and financial position of the institution; |
| (5) | an estimation of the timeframe for executing each material aspect of the plan; |
| (6) | a detailed description of any material impediment to the effective and timely execution of the plan, including consideration of impact on the rest of the group, customers and counterparties; |
| (7) | identification of critical functions; |
| (8) | a detailed description of the processes for determining the value and marketability of the core business lines, operations and assets of the institution; |
| (9) | a detailed description of how recovery planning is integrated into the corporate governance structure of the institution as well as the policies and procedures governing the approval of the recovery plan and identification of the persons in the organisation responsible for preparing and implementing the plan; |
| (10) | arrangements and measures to conserve or restore the institution’s own funds; |
| (11) | arrangements and measures to ensure that the institution has adequate access to contingency funding sources, including potential liquidity sources, an assessment of available collateral and an assessment of the possibility to transfer liquidity across group entities and business lines, to ensure that it can continue to carry out its operations and meet its obligations as they fall due; |
| (12) | arrangements and measures to reduce risk and leverage; |
| (13) | arrangements and measures to restructure liabilities; |
| (14) | arrangements and measures to restructure business lines; |
| (15) | arrangements and measures necessary to maintain continuous access to financial markets infrastructures; |
| (16) | arrangements and measures necessary to maintain the continuous functioning of the institution’s operational processes, including infrastructure and IT services; |
| (17) | preparatory arrangements to facilitate the sale of assets or business lines in a timeframe appropriate for the restoration of financial soundness; |
| (18) | other management actions or strategies to restore financial soundness and the anticipated financial effect of those actions or strategies; |
| (19) | preparatory measures that the institution has taken or plans to take in order to facilitate the implementation of the recovery plan, including those necessary to enable the timely recapitalisation of the institution; |
| (20) | a framework of indicators which identifies the points at which appropriate actions referred to in the plan may be taken. |
SECTION B
Information that resolution authorities may request institutions to provide for the purposes of drawing up and maintaining resolution plans
Resolution authorities may request institutions to provide for the purposes of drawing up and maintaining resolution plans at least the following information:
| (1) | a detailed description of the institution’s organisational structure including a list of all legal persons; |
| (2) | identification of the direct holders and the percentage of voting and non-voting rights of each legal person; |
| (3) | the location, jurisdiction of incorporation, licensing and key management associated with each legal person; |
| (4) | a mapping of the institution’s critical operations and core business lines including material asset holdings and liabilities relating to such operations and business lines, by reference to legal persons; |
| (5) | a detailed description of the components of the institution’s and all its legal entities’ liabilities, separating, at a minimum by types and amounts of short term and long-term debt, secured, unsecured and subordinated liabilities; |
| (6) | details of those liabilities of the institution that are eligible liabilities; |
| (7) | an identification of the processes needed to determine to whom the institution has pledged collateral, the person that holds the collateral and the jurisdiction in which the collateral is located; |
| (8) | a description of the off balance sheet exposures of the institution and its legal entities, including a mapping to its critical operations and core business lines; |
| (9) | the material hedges of the institution including a mapping to legal persons; |
| (10) | identification of the major or most critical counterparties of the institution as well as an analysis of the impact of the failure of major counterparties in the institution’s financial situation; |
| (11) | each system on which the institution conducts a material number or value amount of trades, including a mapping to the institution’s legal persons, critical operations and core business lines; |
| (12) | each payment, clearing or settlement system of which the institution is directly or indirectly a member, including a mapping to the institution’s legal persons, critical operations and core business lines; |
| (13) | a detailed inventory and description of the key management information systems, including those for risk management, accounting and financial and regulatory reporting used by the institution including a mapping to the institution’s legal persons, critical operations and core business lines; |
| (14) | an identification of the owners of the systems identified in point (13), service level agreements related thereto, and any software and systems or licenses, including a mapping to their legal entities, critical operations and core business lines; |
| (15) | an identification and mapping of the legal persons and the interconnections and interdependencies among the different legal persons such as:
|
| (16) | the competent and resolution authority for each legal person; |
| (17) | the member of the management body responsible for providing the information necessary to prepare the resolution plan of the institution as well as those responsible, if different, for the different legal persons, critical operations and core business lines; |
| (18) | a description of the arrangements that the institution has in place to ensure that, in the event of resolution, the resolution authority will have all the necessary information, as determined by the resolution authority, for applying the resolution tools and powers; |
| (19) | all the agreements entered into by the institutions and their legal entities with third parties the termination of which may be triggered by a decision of the authorities to apply a resolution tool and whether the consequences of termination may affect the application of the resolution tool; |
| (20) | a description of possible liquidity sources for supporting resolution; |
| (21) | information on asset encumbrance, liquid assets, off-balance sheet activities, hedging strategies and booking practices. |
SECTION C
Matters that the resolution authority is to consider when assessing the resolvability of an institution or group
When assessing the resolvability of an institution or group, the resolution authority shall consider the following:
When assessing the resolvability of a group, references to an institution shall be deemed to include any institution or entity referred to in point (c) or (d) of Article 1(1) within a group:
| (1) | the extent to which the institution is able to map core business lines and critical operations to legal persons; |
| (2) | the extent to which legal and corporate structures are aligned with core business lines and critical operations; |
| (3) | the extent to which there are arrangements in place to provide for essential staff, infrastructure, funding, liquidity and capital to support and maintain the core business lines and the critical operations; |
| (4) | the extent to which the service agreements that the institution maintains are fully enforceable in the event of resolution of the institution; |
| (5) | the extent to which the governance structure of the institution is adequate for managing and ensuring compliance with the institution’s internal policies with respect to its service level agreements; |
| (6) | the extent to which the institution has a process for transitioning the services provided under service level agreements to third parties in the event of the separation of critical functions or of core business lines; |
| (7) | the extent to which there are contingency plans and measures in place to ensure continuity in access to payment and settlement systems; |
| (8) | the adequacy of the management information systems in ensuring that the resolution authorities are able to gather accurate and complete information regarding the core business lines and critical operations so as to facilitate rapid decision making; |
| (9) | the capacity of the management information systems to provide the information essential for the effective resolution of the institution at all times even under rapidly changing conditions; |
| (10) | the extent to which the institution has tested its management information systems under stress scenarios as defined by the resolution authority; |
| (11) | the extent to which the institution can ensure the continuity of its management information systems both for the affected institution and the new institution in the case that the critical operations and core business lines are separated from the rest of the operations and business lines; |
| (12) | the extent to which the institution has established adequate processes to ensure that it provides the resolution authorities with the information necessary to identify depositors and the amounts covered by the deposit guarantee schemes; |
| (13) | where the group uses intra-group guarantees, the extent to which those guarantees are provided at market conditions and the risk management systems concerning those guarantees are robust; |
| (14) | where the group engages in back-to-back transactions, the extent to which those transactions are performed at market conditions and the risk management systems concerning those transactions practices are robust; |
| (15) | the extent to which the use of intra-group guarantees or back-to-back booking transactions increases contagion across the group; |
| (16) | the extent to which the legal structure of the group inhibits the application of the resolution tools as a result of the number of legal persons, the complexity of the group structure or the difficulty in aligning business lines to group entities; |
| (17) | the amount and type of eligible liabilities of the institution; |
| (18) | where the assessment involves a mixed activity holding company, the extent to which the resolution of group entities that are institutions or financial institutions could have a negative impact on the non-financial part of the group; |
| (19) | the existence and robustness of service level agreements; |
| (20) | whether third-country authorities have the resolution tools necessary to support resolution actions by Union resolution authorities, and the scope for coordinated action between Union and third-country authorities; |
| (21) | the feasibility of using resolution tools in such a way which meets the resolution objectives, given the tools available and the institution’s structure; |
| (22) | the extent to which the group structure allows the resolution authority to resolve the whole group or one or more of its group entities without causing a significant direct or indirect adverse effect on the financial system, market confidence or the economy and with a view to maximising the value of the group as a whole; |
| (23) | the arrangements and means through which resolution could be facilitated in the cases of groups that have subsidiaries established in different jurisdictions; |
| (24) | the credibility of using resolution tools in such a way which meets the resolution objectives, given possible impacts on creditors, counterparties, customers and employees and possible actions that third-country authorities may take; |
| (25) | the extent to which the impact of the institution’s resolution on the financial system and on financial market’s confidence can be adequately evaluated; |
| (26) | the extent to which the resolution of the institution could have a significant direct or indirect adverse effect on the financial system, market confidence or the economy; |
| (27) | the extent to which contagion to other institutions or to the financial markets could be contained through the application of the resolution tools and powers; |
| (28) | the extent to which the resolution of the institution could have a significant effect on the operation of payment and settlement systems. |