{"id":"circulars/cssf-24-851","title":"Circular CSSF 24/851","type":"circular","date":"2024-01-25","kind":"circular","html":"

Circular CSSF 24/851 is a CSSF circular, published 25 January 2024. Subject: Application of the Guidelines of the European Banking Authority on overall recovery capacity in recovery planning (EBA/GL/2023/06).

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Relevant for: Credit institutions, Investment firms.

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Keywords: Internal governance, Risk management.

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Circular CSSF 24/851 Application of the Guidelines of the European Banking Authority on overall recovery capacity in recovery planning (EBA/GL/2023/06)

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Circular CSSF 24/851 Application of the Guidelines of the European Banking Authority on overall recovery capacity in recovery planning (EBA/GL/2023/06) To all BRRD institutions submitting a recovery plan to the CSSF

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Luxembourg, 25 January 2024 Ladies and Gentlemen, The purpose of this circular is to inform you that the CSSF, in its capacity as competent authority, applies the Guidelines of the European Banking Authority (the “EBA”) on overall recovery capacity in recovery planning (Ref. EBA/GL/2023/06) (the “Guidelines”), published on 19 July 2023. Consequently, the CSSF has integrated the Guidelines into its administrative practice and regulatory approach with a view to promoting supervisory convergence in this field at European level. All entities described in the scope of application below shall duly comply with the Guidelines.

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  1. The Guidelines The Guidelines are issued by the EBA on its own initiative in relation to Directive 2014/59/EU 1 and Commission Delegated Regulation (EU) 2016/1075 2 (the “Commission Delegated Regulation”) which provide for institutions to include a summary of their overall recovery capacity (the “ORC”) within their recovery plans, the ORC being the extent to which the recovery options allow an institution to recover in a range of scenarios of severe macroeconomic and financial stress 3. Section III of the Commission Delegated Regulation also provides for the competent authorities’ assessment of the recovery plan, including the ORC. The Guidelines aim to achieve a harmonised approach to the determination and assessment of the ORC. In defining the methodology for the determination of the ORC, the first part of the Guidelines specifies the steps that institutions should follow when establishing their ORC based on two fundamental components: i) the list of credible and feasible recovery options, and ii) the range of sufficiently severe scenarios. The second part of the Guidelines complements the ORC framework by supporting competent authorities in their assessment of institutions’ ORC as part of the overall assessment of recovery plans. The Guidelines and an illustrative example of how the different steps for the ORC determination could be practically implemented are attached to this circular and are available on the EBA’s website.
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1 Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012 of the European Parliament and of the Council. 2 Commission Delegated Regulation (EU) 2016/1075 of 23 March 2016 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the content of recovery plans, resolution plans and group resolution plans, the minimum criteria that the competent authority is to assess as regards recovery plans and group recovery plans, the conditions for group financial support, the requirements for independent valuers, the contractual recognition of write-down and conversion powers, the procedures and contents of notification requirements and of notice of suspension and the operational functioning of the resolution colleges. 3

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Art. 12(3) of Commission Delegated Regulation (EU) 2016/1075.

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The text above is the opening of the document; the PDF carries the whole.

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Document page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.

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