Brussels, 24/09/2014 (Agence Europe) - On Wednesday 24 September, the European Banking Authority (ABE) adopted guidelines laying down the conditions under which extraordinary public support measures will not automatically trigger a bank resolution process.
Under the “BBRD” directive (2014/59), which harmonises the national bank resolution procedures in the EU from 2015, extraordinary public support - involving the injection of own funds or the acquisition of capital instruments - to solvent financial institutions in response to a capital shortfall observed as a result of “stress tests” or an asset quality review will not necessarily trigger a resolution process. This support, which will be assessed in the light of European State aid rules, may not give the beneficiary bank an advantage, must be proportionate and limited in time and cannot be used to absorb an actual or expected loss.
The EBA guidelines clarify the details on the “stress tests” and asset quality reviews. These must include a specific timetable and scope of application as well as a quality assurance procedure. A macro-economic scenario should also be provided.
The national authorities have until 1 December to notify the European authority as to whether or not they intend to comply with these guidelines. (MB)