ECB Annual Report on supervisory activities

State of play on close cooperation
EU Member States whose currency is not the euro may participate in the SSM under
a regime of close cooperation. The main conditions for this are set out in Article 7 of
the SSM Regulation and the procedural aspects are provided for in Decision
<strong>ECB</strong>/2014/5. No formal requests for close cooperation were received in 2016.
3.1.2 Involvement in the EU’s recovery and resolution framework
The EU’s recovery and resolution framework provides an important anchor for
promoting banking sector stability in the EU. <strong>ECB</strong> Banking Supervision plays a major
role within this framework. The involvement of <strong>ECB</strong> Banking Supervision in this area
increased in 2016, partly as a result of the further operationalisation of the Single
Resolution Mechanism.
The involvement of <strong>ECB</strong> Banking
Supervision in tasks related to the
EU’s recovery and resolution
framework is increasing
Assessing recovery plans is a key task in <strong>ECB</strong> Banking Supervision’s work towards
increasing the resilience of significant institutions in periods of heightened stress.
The 2015 cycle for the submission of recovery plans for which the assessment was
conducted in 2016, was transitional. When the institutions submitted the recovery
plans to the <strong>ECB</strong>, the Bank Recovery and Resolution Directive (BRRD) had not been
transposed in all Member States and some of the relevant regulations on drafting
recovery plans had not yet been implemented. <strong>ECB</strong> Banking Supervision’s objective
was to receive a first set of recovery plans for all institutions and to ensure that those
plans would soon be in a position to meet the minimum requirements set by the
BRRD and relevant Commission Delegated Regulations. For plans with significant
deficiencies, banks were required to take remedial action before the next submission
of the plan.
Based on these assessments, the <strong>ECB</strong> conducted benchmarking exercises, which
revealed key areas for improvement in the areas of the completeness and quality of
data, the credibility of recovery options, the severity of scenarios and the calibration
of recovery indicators, among other things. This in turn fed into the feedback letters
sent to banks at the end of the assessment. The recovery plans for 2016 were
submitted in September and December 2016, and the assessment of those plans is
currently under way. This will ensure that banks have credible recovery options that
they can implement to restore their resilience in times of stress.
<strong>ECB</strong> Banking Supervision regularly
interacts with the SRB on issues
related to resolution planning
In 2016 the SRB and the <strong>ECB</strong> implemented the bilateral Memorandum of
Understanding establishing rules for cooperation and information exchange which
was concluded at the end of 2015. More generally, the <strong>ECB</strong> shared recovery plans
and other information and data with the SRB as agreed in the Memorandum of
Understanding.
The SRB consulted <strong>ECB</strong> Banking Supervision in 2016 on the draft resolution plans
for a number of significant institutions. The <strong>ECB</strong> made its assessment and sent
feedback to the SRB. Fruitful discussions and a valuable exchange of information
between the <strong>ECB</strong> and the SRB also took place in the context of the SRB’s task of
setting minimum requirements for own funds and eligible liabilities (MREL).
<strong>ECB</strong> <strong>Annual</strong> <strong>Report</strong> on supervisory activities 2016 − The SSM as part of European and
global supervisory architecture 45