AIMA

RRD - Framework for Credit Institutions and Investment Firms 

On 6 June 2012, the European Commission released its proposal for a ‘Directive establishing a framework for the recovery and resolution of credit institutions and investment firms’ (RRD).

The RRD proposal has been developed in order to fulfil the EU’s G20 and FSB commitments on the recovery and resolution of large financial institutions and groups, and provides for a harmonised system of European rules which are intended to deal with the distress and failure of such institutions within the EU in order to minimise systemic consequences and avoid recourse to extraordinary public support.

The RRD proposal can be separated into three categories:

• Prevention - which includes requirements for recovery and resolution plans, the removal of obstacles to resolvability and intra-group support arrangements;
• Early Intervention - which includes the power for relevant authorities to intervene in the activities of a struggling institution and, in certain circumstances, to appoint a special manager; and
• Resolution - which includes rules for the relevant authorities to take certain actions using one or more ‘resolution tools’ to resolve institutions which have failed or are likely to fail in order to minimise systemic impacts and recourse to taxpayer funds.

The text of the RRD proposal is currently being negotiated within the European Parliament and Council of the European Union. The institutions are to approve amended versions of the text to form the basis of their positions during inter-institutional ‘trialogue’ negotiations. The European Parliament ECON Committee adopted its final compromise text on 20 May 2013, which now will be referred to a European Parliament plenary vote. The Council has yet to reach a finalised position or 'General Approach'.

The European Banking Authority issued a preparatory Level 2 consultation on the RRD which deals with the content of recovery planning at institution and group level.

Key legislative documents

Proposal for a Directive establishing a framework for the recovery and resolution of credit institutions and investment firms (June 2012)

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Relevant consultations

Draft Regulatory Technical Standards on the content of recovery plans under the draft Directive establishing a framework for the recovery and resolution of credit institutions and investment firms (March 2013)

DG Internal Market Discussion Paper on the debt write-down tool – bail-in (April 2012)

EC Consultation on technical details of a possible European crisis management framework (January 2011)

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AIMA documents

Response to Discussion Paper on the debt write-down tool – bail-in (May 2012)

Response to EC crisis management consultation (March 2011)

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Other documents

ECB Opinion on Commission Proposal for the RRD (November 2012)

EC Communication on an EU Framework for Crisis Management in the Financial Sector (October 2010)

EC Communication on Bank Resolution Funds (May 2010)

EC Communication – An EU Framework for Cross-Border Crisis Management in the Banking Sector (October 2009)

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