EBA has published various final draft RTS related to the bail-in resolution under the BRRD, specifically on:

  • the methodology for the valuation of derivative liabilities for the purpose of bail-in in resolution, based on the “no creditor worse off” principle. The approach applies a statutory valuation methodology based on the costs or gains that would be incurred by the counterparty in replacing the contract. Derivative counterparties can provide evidence of commercially reasonable replacement trades within a certain deadline but, if they do not, then resolution authorities will apply a statutory methodology. Resolution authorities may establish the value of derivative liabilities as on the close-out date or as on the date when a price is available in the market. For centrally cleared derivatives, the process relies in principle on the Central Counterparty (CCP) default and valuation processes under EMIR;
  • the content of business reorganisation plans and progress reports, and guidelines defining how to assess plans. The draft RTS develop in detail the elements that should be included in a resolution plan and the content of the related progress reports. The draft Guidelines specify further the minimum criteria for a plan for authorities across the EU to approve; and
  • defining the minimum set of the information on financial contracts that should be contained in detailed records and the circumstances under which the requirement to maintain such detailed records should be imposed.

The Commission now needs to adopt these standards and have them translated into the EU official languages. (Source: EBA Publishes Derivatives Valuation RTSBusiness Reorganisation Plans RTS and Contracts Records RTS)