11.12.1 Why is this a relevant characteristic?

The Restructuring Communication provides that the restructuring plan should demonstrate how the bank will restore its long-term viability without State aid as soon as possible. In particular, the restructuring plan should demonstrate that the bank will be able to generate appropriate return on equity, while covering all costs of its normal operations and complying with the relevant regulatory requirements. In order to demonstrate the return to viability, the restructuring plan should contain financial forecasts/projections on the expected revenues, costs, impairments, profits and capital position. The expected results of the restructuring need to be demonstrated under a base case scenario and a stress case scenario.1 The financial projections under both scenarios are based on assumptions, and it is important that those assumptions are reliable or reasonable.2 Particularly with respect to the stress test macroeconomic assumptions, the Commission has considered that these assumptions should be sufficiently severe to be considered to be a stress scenario.3

Hence, in its decisional practice, the Commission verifies whether the financial projections used in the restructuring plan are based on reasonable underlying macroeconomic assumptions.