11.12.3 How is this relevant characteristic elaborated in the decisions?

In the final decisions, the Commission always concluded that the assumptions were reasonable. In that regard, the following observation can be made: the assumptions themselves are usually not shown in the decisions.1 Only the conclusion that the assumptions are reasonable – and the considerations to substantiate that conclusion – figure in the decisions. The most commonly used considerations are discussed below.

A commonly used consideration is that the assumptions were provided by (or reviewed/verified/validated by) the financial supervisory authority. For instance, in the decision on Ethias, the Commission noted that the assumptions underlying the stress case scenario were provided by the CBFA (i.e. the Belgian regulator: Commission Bancaire, Financière et des Assurances).2 Likewise, in the decision on FIB, the Commission positively noted that the assumptions retained for the restructuring plan were coming from the Bulgarian National Bank and presented sufficient level of prudence and conservatism.3

Another consideration can be found in the case of the Cooperative Central Bank (CCB). In this case, the macro-economic assumptions were in line with the macro-economic forecasts used for the Economic Adjustment Programme for Cyprus as agreed between Cyprus and the Commission, the ECB and the IMF.4

Considerations that support the conclusion that the assumptions are not reasonable can be found in the Opening Decisions. For instance, in the Opening Decision on BayernLB, the Commission expressed its doubts on the assumptions. “The Commission notes that economic forecasts have deteriorated in a significant manner in recent weeks and the provided forecasts by the bank are therefore outdated. While the bank has foreseen such a possibility by using higher risk provisioning than needed in a base case scenario, the Commission has doubts whether this is sufficient for making up for the deteriorating economic forecasts”.5

Likewise, in the Opening Decision on Parex banka, the Commission considered that the restructuring plan seemed to be depending on rather optimistic assumptions as to future operating conditions.6 The Commission had doubts on the assumptions on the bank’s penetration in different market segments.7