Requirements for the content of recovery plans
Detailed requirements for the content of recovery plans will be published by BaFin as
Minimum Requirements for the Design of Recovery Plans (Mindestanforderungen an die
Ausgestaltung von Sanierungsplänen – MaSan). Key aspects are a strategic analysis of the
institution, internal and external interconnectedness and, most importantly, recovery options
and recovery indicators which are evaluated in a set of stress scenarios.
Beyond recovery
plans written by the institutions themselves, BaFin will develop resolution plans which will
be discussed with the FMSA and the Bundesbank. In addition, BaFin will examine the
resolvability of institutions. If, after consultation with the Bundesbank and the FMSA, the
assessment indicates obstacles to the resolution of a particular institution, BaFin will first
address this matter with the institution itself and then, if an adequate response is not taken or
proposed, will take steps to eliminate the impediments.
In the event of a failure of a potential
systemically important institution, BaFin has the power to transfer the assets and liabilities of
the institution (e.g. To a bridge bank) to avoid a systemic crisis caused by an immediate
interruption of financial services. Such a transfer requires the concurrence of the FMSA’s
Steering Committee if it entails or could necessitate financial assistance from the
Restructuring Fund (SoFFin). BaFin shall, after consultation with the Bundesbank, assess
whether any going-concern risk and/or systemic risk with regard to the failing institutions is
evident. According to restructuring law, a restructuring fund is managed by the FMSA,
established to provide funding for bridge banks where this is needed. All German credit
institutions pursuant to section 1 (1) of the German Banking Act, with a few minor
exceptions pursuant to section 2 of the Restructuring Fund Act (Restrukturierungsfondsgesetz
– RstrukFG), are obliged to contribute to this fund.
In addition, BaFin and the Bundesbank jointly developed a method to identify potential
systemically important institutions. The approach is based upon recommendations from the
BCBS on this issue and the German Banking Act.
In order to increase the solvency and resolvability of credit institutions and to contribute to
the stabilisation of financial markets, the Act on Ringfencing and Recovery and Resolution
Planning for Credit Institutions and Financial Groups requires – if certain thresholds are
exceeded – deposit-taking credit institutions to separate proprietary trading and other highly
risky capital market activities from deposit-related activities by spinning these risky activities
off into a legally, economically and organisationally independent company. The Bill has
entered into force in January 2014; spin-off activity will be implemented by mid-2016.
EU Forecast
euf:ba.18.j:111/nws-01