7.5.2.3 Loss of proportionality in restructuring

As discussed in section 3.7.1, the Commission conducts a proportionate assessment of the long term viability of banks under the State aid regime for the banking sector, taking full account of elements indicating that banks could be viable in the long term without the need for significant restructuring. As a result, banks can benefit from a complete or partial exemption from restructuring under the State aid regime for the banking sector.

The proportionality principle also applies under the resolution framework. The competent and resolution authorities are permitted to apply different or significantly reduced recovery and resolution planning and information requirements on an institution-specific basis, and at a lower frequency for updates than one year. For a small bank with little interconnectedness and complexity, a recovery plan could be reduced to basic information on its structure, triggers for recovery actions, and recovery options. If a bank could be permitted to go insolvent, then the resolution plan could be reduced.1 The competent authorities and, where relevant, resolution authorities, even have the option to waive the requirements relating to the preparation of the recovery and resolution plans on a case-by-case basis in the limited cases specified in the BRRD.2 Although the proportionality principle is applied in relation to the recovery and resolution planning, this is absent in respect of the business reorganisation plan. Delegated Regulation (EU) 2016/1400 sets strict requirements as to the contents of the business reorganisation plan, without providing any basis for proportional application thereof.