EBA Report on Appropriate Reference Point for Target Level of Resolution Financing Arrangements Under BRRD


On October 31, 2016, the EBA published a report (“EBA-OP-2016-18“) on the appropriate point for the target level for resolution financing arrangements. The EBA produced the report under Article 102(4) of the Bank Recovery and Resolution Directive (“BRRD“) (2014/59/EU).

In the report, dated October 28, 2016, the EBA recommends changing the basis from covered deposits to a total liabilities‑based measure and, in particular, “total liabilities excluding own funds less covered deposits.” Following a qualitative and quantitative assessment of various criteria, the EBA believes that this is the most appropriate target level basis for resolution financing arrangements. It considers this basis to be simple and transparent, and also consistent with the regulatory framework and calculation methodology for individual contributions.

A further recommendation in the report is that if the European Commission issues a legislative proposal on amending the target level basis for national resolution financing arrangements, it should also consider adjusting:

  • The percentage of the target level.
  • The target level basis for the single resolution fund (“SRF“).

The European Commission will consider the EBA’s recommendations, and decide whether to submit a legislative proposal to amend the target level basis for resolution financing arrangements, by December 31, 2016.