4.7.1.1 Recovery and resolution plan

A recovery plan could imply changes to the business organisation of a bank, either to facilitate the update of the plan and its implementation in the future or because the process has identified some impediments complicating the implementation of recovery options. Those organisational preparatory and follow-up actions to be taken by the bank or the group should be described in the recovery plan in order to facilitate effective assessment of whether its implementation is reasonably likely, and to facilitate monitoring of its implementation by the bank or the group, and by competent and resolution authorities, respectively.1 If a competent authority is of the view that the recovery plan submitted by the bank is not sufficient in that respect, it can impose additional restructuring requirements.2

In addition, the resolution authority can impose restructuring requirements on a bank through the resolvability assessment. This assessment is made at the same time as and for the purpose of the drawing up and updating of the resolution plan. The requirement for resolution authorities to draw up a resolution plan is suspended until measures proposed by the bank to remove the substantive impediments to resolvability have been accepted or, if the measures proposed by the bank are insufficient, decided on by the resolution authority.3

The recovery and restructuring plan also have to provide for the necessary restructuring in recovery and resolution. The recovery plan has to include a sufficient number of plausible and viable recovery options which make it reasonably likely that the bank or group would be able to counter different scenarios of financial distress quickly and effectively.4 The resolution plan has to include a detailed description of the different resolution strategies that could be applied according to the different possible scenarios and the applicable timescales.5 The resolution authorities are however not bound by the provisions of the recovery and resolution plan.