The EBA Sets 2025 Priorities For Resolution Authorities And Reports On The Progress Achieved In 2023

The European Banking Authority (EBA) today published its European Resolution Examination Programme (EREP) Report. It sets three priorities for resolution authorities and banks for 2025: operationalisation of their resolution tools, liquidity strategies in resolution, and management information system for valuation. The Report also looks at the progress achieved in 2023 and identifies areas of improvement.

The 2025 EREP priorities confirm and complement the areas of focus set for 2024, given their relevance and the fact that work takes time on those complex topics. New elements introduced for 2025 reflect policy and market developments, progress and expertise gained by resolution authorities and, overall, embed a testing dimension which is considered central for resolution readiness.

Compared to 2024, building up own funds and eligible liabilities is not a separate priority anymore, given that most banks have met their minimum requirement for own funds and eligible liabilities (MREL). However, to increase the effectiveness of the bail-in tool, MREL qualitative aspects are to be further monitored as part of the operationalisation of resolution tools, and quantitative aspects will be followed and disclosed by the EBA in its MREL Dashboard.

In 2023, convergence increased within the EU with regards to resolution planning practices and objectives.

On MREL, only four banks did not meet their target as of 1 January 2024. Resolution authorities have used their powers to impose sanctions and extended deadlines for 22 institutions. They have also increased their monitoring of MREL eligibility and quality, especially for contracts governed by third-country law.

On the operationalisation of the bail-in tool, most resolution authorities have now published their bail-in mechanics and consider that challenges concerning the identification of holders of instruments, suspension for trading or requirements of issuing prospectus for the new instruments persist and are particularly prominent in relation to third country stakeholders.

While some progress has been observed in the area of liquidity in resolution, resolution authorities plan to further increase the intensity of their testing and to challenge the severity of banks’ scenarios.

Finally, resolution authorities have performed more testing of management information systems for valuation as some banks showed significant gaps in data quality, automation, granularity and timeliness of report delivery. Further progress remains needed. Resolution authorities have put in place procedures for quickly appointing a valuer. The EBA supports the work of resolution authorities and is preparing a Handbook on the independence of valuers currently under public consultation.

Note to the editors

According to Articles 25 and 29 of its founding Regulation, the EBA shall contribute to, and participate actively in, the development and coordination of effective, consistent and up-to-date recovery and resolution plans for financial institutions and shall also develop and maintain an up-to-date Union resolution handbook on the resolution of financial institutions in the Union.

The EBA fosters convergence in resolution practices by setting EREP priorities and publishing a report on an annual basis. The is the second edition of the EBA’s EREP priorities and report.

The EREP priorities highlights the topics on which EU banks and resolution authorities need to pay special attention in the next calendar year. They are selected based on the expertise of the EBA and its members in policy development, on the practical experience of resolution authorities, and of the resolution colleges in which the EBA participates. The EBA subsequently assesses whether and how the selected topics have been taken into account in resolution authorities’ priorities and activities.

Separately, as part of its convergence mandate, the EBA sets priorities for banks and their supervisors on an annual basis in its European Supervisory Examination Programme (ESEP), which includes the key topics for heightened supervisory attention across the European Union. In addition, following the entry into force of the Markets in Crypto-assets Regulation, the EBA also set out key topics for supervisory attention across the European Union in 2024/2025 for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs), with the aim of promoting the timely and consistent application of MiCAR.