On May 26, 2015, the European Banking Authority (EBA) published its final guidelines (EBA/GL/2015/07) on how to determine whether an institution is failing or likely to fail for the purposes of the BRRD.

Under Article 32(1) of the BRRD, the relevant authority must determine that the firm is failing or likely to fail before resolution action can be taken. The guidelines provide separate guidance for competent authorities and resolution authorities. Competent authorities should base their determination on their assessment of the firm’s viability under the supervisory review and examination process set out in the CRD IV Directive (2013/36/EU).  Resolution authorities must consider the firm’s capital and liquidity position, as well as other requirements set out in the BRRD. The guidelines will apply from January 1, 2016.