On 22 September 2014, the European Banking Authority (EBA) launched a consultation on two draft Guidelines on (i) the triggers for using early intervention measures and on (ii) the circumstances under which an institution shall be considered as failing or likely to fail (triggers for resolution). They aim at promoting convergence of supervisory and resolutions practices in relation to how resolution should be triggered and how to apply early intervention measures.
The Guidelines on triggers for early intervention are addressed to competent authorities and clarify the conditions for using early intervention measures foreseen by the Bank Recovery and Resolution Directive (BRRD). The triggers for early intervention are to a large extent based on the outcomes of the supervisory review and examination process (SREP). The draft Guidelines also provide for the possibility of triggering early intervention measures on the basis of significant events and material deterioration or anomalies in the key indicators monitored by the competent authorities before they are fully reflected in the SREP scores.
The determination that an institution is failing or likely to fail is made by the relevant competent authority, but Member States may grant this power to the relevant resolution authority too. In this regard, the draft Guidelines provide separate guidance for the competent authorities, where the determination is based primarily on the outcomes of the SREP assessment of the viability of an institution, and for the resolution authorities, where the determination is based on the objective elements specified in the Guidelines (which cover an institution's capital and liquidity position as well as other requirements for continuing its authorisation).