.jpg)
The European Banking Authority (EBA) published today a set of Final draft Regulatory Technical Standards (RTS) that specifies the functions of the EU resolution colleges established for resolving failing banks operating on a cross-border basis in the European Economic Area (EEA). These RTS have been developed within the framework established by the EU Bank Recovery and Resolution Directive (the BRRD) and specify how resolution colleges should function, from their establishment to going concern, and from planning the resolution of an institution to managing situations of cross-border resolution.
The EBA's standards focus on the operational organisation of resolution colleges and describe the resolution planning process - from the assessment of the resolvability of an institution to the minimum requirements for own funds and eligible liabilities (MREL) -, and give detail on how the resolution of a cross-border group should be carried out, i.e. those banking institutions or groups operating in more than one country in the European Economic Area (EEA).
Resolution colleges are the bodies that ensure cooperation of all parties at all stages of the resolution process of a failing bank. These RTS also cover situations of disagreement, so as to ensure that transparency is given to decisions taken on individual basis and cooperation and interaction between resolution authorities continues also in such cases. The involvement of resolution authorities of third countries, both in resolution planning and in group resolution, is also foreseen by these RTS, which require EU resolution authorities to develop and specify a framework covering this third country involvement.
The recent financial crises have shown that cross-border cooperation and coordination are vital for effective resolution of failing institutions within the EU banking sector. These RTS have taken into account the EBA's experience in the organisation and running of EU supervisory colleges in the banking sector, as well as the lessons learned on home-host cooperation (the countries where an institution is based and the countries where it operates) during situations of both going concern and emergency.
Legal basis
These RTS have been developed according to Article 88(7) of the BRRD which mandates the EBA with the development of draft regulatory technical standards (RTS) to specify the operational functioning of the resolution colleges for the performance of the tasks referred to in paragraph 1 of that Article.
