On August 23, 2016, a Commission Delegated Regulation outlining the RTS on the elements of a business reorganization plan and the minimum contents for reporting progress in the implementation of the plan was published in the Official Journal of the European Union. The final RTS do not differ substantively from the RTS adopted by the European Commission on May 10, 2016. The final RTS supplement the requirements set out in the BRRD, which require a firm that has been bailed-in to submit a plan to the resolution authority on how the firm, or parts of it, might be restored to long-term viability within a reasonable timescale.
The RTS require a business reorganization plan to set out the firm’s strategy for restoring viability, the projected financial performance of the firm, how it meets its prudential regulatory requirements on a going-forward basis and quarterly implementation milestones and performance indicators. The business reorganization plan must also include information that will allow the national regulator and resolution authority to conduct a viability assessment of the proposed strategy for restoration.
The BRRD also requires firms to submit progress reports to the resolution authority and national regulator on the implementation of the plan. The RTS set out the required contents of a progress report. The report should outline the milestones that have been met, the measures that have been realized and the actual impact of the measures taken compared with those that were envisaged. In addition, it must provide a comparison of the actual performance of the institution against the forecast in the business reorganization plan. If the firm has failed to meet milestones or has been delayed in doing so, the report should include reasons and proposals to remedy shortfalls. The report should also refer to any issues arising in the execution of the plan that may prevent restoration to long-term viability, upcoming measures and milestones and, if necessary, proposals for adjustments to milestones or performance indicators. The RTS entered into force on September 12, 2016.
The RTS on business reorganization plans is available at: http://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:32016R1400&from=EN.