EN ECB-PUBLIC 
	
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 11 April 2013 
on crisis planning and early intervention for credit institutions 
(CON/2013/26) 
 Introduction and legal basis 
On 22 February 2013, the European Central Bank (ECB)  received a request from the Austrian Ministry of 
Finance (MoF) for an opinion on a draft Banking Intervention and Restructuring Act, amendments to the Federal Banking Act and the Financial Market Au thority Act (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and sixth indents of Article 2(1) of Council 
Decision 98/415/EC of 29 June 1998 on the consulta tion of the European Central Bank by national 
authorities regarding draft legislative provisions
1, as the draft law relates to the Oesterreichische 
Nationalbank (OeNB) and contains rules applicable to  banks which materially influence the stability of 
financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of 
Procedure of the European Central Bank, th e Governing Council has adopted this opinion. 
 1. Purpose of the draft law 1.1 The general purpose of the draft law is to establish a preventive crisis planning and early 
intervention regime for credit institutions (CIs). Th e draft law requires CIs to prepare recovery and 
resolution plans. It also introduces certain early intervention measures that may be taken by the 
Financial Market Authority (FMA) as regards CIs in breach of certain triggers (see point 1.3 below for details). In this way, the draft law aims to prevent CIs becoming distressed, thereby reducing 
the likelihood of public funds needing to be used  to bail out CIs. The draft law is based on the 
European Commission’s proposal for a directiv e on the recovery and resolution of credit 
institutions and investment firm s dated 6 June 2012 (the BRRD)
2. However, the draft law does not 
encompass resolution mechanisms as proposed in the BRRD. 
1.2 In order to prepare for crisis  scenarios, CIs shall establish rec overy and resolution plans and submit 
them to the FMA. Recovery plans must describe th e measures to be taken by each CI in the event 
                                                            
1  OJ L 189, 3.7.1998, p. 42. 
2  Proposal for a Directive of the Europ ean Parliament and of the Council estab lishing a framework for the recovery and 
resolution of credit institutions and investment firm s and amending Council Directives 77/91/EEC and 82/891/EC, 
Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC , 2007/36/EC and 2011/35/EC and Regulation (EU) 
No 1093/2010, COM (2012) 280 final. 
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2 of a significant deterioration in its financial situation. In their resolution plans, CIs shall 
demonstrate a coordinated approach to the pot ential resolution or reorganisation of the CI. 
Recovery and resolution plans are to be updated annua lly or in the event of a significant change in 
the underlying conditions. The FMA shall analyse bo th the recovery and resolution plans, and may 
require amendments if deemed necessary. In th is context, the FMA shall also seek the expert 
opinion of the OeNB as to whether the legal requi rements for recovery and resolution plans defined 
in the draft law are met. 
If a CI is part of a group entity, the parent ins titution shall prepare recovery and resolution plans for 
the entire group, including recovery plans for each  of its significant subsidiary institutions and 
resolution plans for all subsidiary institutions. Refe rring to the principle of proportionality, the draft 
law provides for exemptions to the requirement to  establish recovery and resolution plans. At the 
request of a CI, the FMA may exempt that CI from individual requirements or reduce the level of 
detail required, depending on the nature of activities of the institution in question, its size or its 
interconnectedness with other financial market pa rticipants. Furthermore, the FMA may exempt a 
CI from preparing recovery and resolution plans altoge ther if, in the event of  that CI’s insolvency, 
there are no concerns that this would have any mate rial adverse impact on the financial markets, on 
other CIs or on funding conditions3. 
1.3 The draft law also strengthens the FMA’s power s and tools for taking early intervention measures. 
If a CI fails to comply with capital or liquidi ty requirements under Directive 2006/48/EC of the 
European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the 
business of credit institutions4 or Directive 2006/49/EC of the European Parliament and of the 
Council of 14 June 2006 on th e capital adequacy of investment firms and credit institutions5 or is at 
risk of violating these requirements, the FMA shal l take one or more of the early intervention 
measures set out in the draft law. A risk of viola tion of the above requirements exists where there is 
a substantial deterioration in a CI’s assets, earnings, liquidity or refinancing situation and where, in 
light of the negative development in question, it may be justifiably assumed that the CI is at risk of 
failing to fulfil its obligations. In any event, it sh all be assumed that a risk of such violation is 
present if the CI’s equity is less than the thres hold of 8 % plus 1.25 % common equity. In order to 
determine whether there is a need for early interv ention, the FMA may order the OeNB to carry out 
on-site audits and request the OeNB ’s expert opinion on this matter. 
Notwithstanding other existing tools, the FMA may direct the following early intervention 
measures in accordance with the draft law: (a) the implementation of one or more recovery measures contained in the recovery plan, (b) the pr ompt preparation of a recovery plan if the FMA 
has previously granted an exemption with regard to the preparation or update of a recovery plan, 
                                                            
3  See Articles 4 and 5 (regarding recove ry plans) and Articles 11 and 12 (resolution plans) of the draft Bank Intervention 
and Restructuring Act. 
4  OJ L 177, 30.6.2006, p. 1. 
5  OJ L 177, 30.6.2006, p. 201. 
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3 (c) the carrying out of specific improvements in or  the intensifying of risk management, (d) the 
convening of a general meeting of the sharehol ders, in particular for taking capital measures, 
(e) the addition of certain items to the agenda of  the general meeting or proposing that certain 
resolutions be added, (f) the preparation of a negotiation plan which envisages the voluntary 
restructuring of the CI’s liabilities with its creditors , or (g) an on-site audit by the OeNB with the 
aim of assessing a CI’s assets and liabilities. 
 2. General observations  
2.1 The ECB welcomes the draft law as it strengthens  the tools and procedures available to the national 
authorities for effective preventive meas ures and early intervention in CIs. 
2.2 The ECB welcomes the recognitio n by the Austrian MoF, as reflected in the explanatory notes to 
the draft law, that there should be a harmonise d approach to providing effective preventive 
measures, early intervention in and resolution of banks at Union level. 
2.3 The ECB notes that the draft law includes aspects of the recovery and resolution planning provided 
for in the BRRD. In this context, the ECB understa nds that the legislator will review the law once 
the BRRD is adopted, in order to ensure full cons istency with developments at Union level. The 
ECB also refers to the Recommendations of th e European Banking Authority on the development 
of recovery plans (EBA/REC/2013/02) dated 23 January 2013. Member States should avoid 
enacting national legislati on that conflicts with developments at Union level, in accordance with 
the general principle of sincere cooperation and loyalty pursuant to the Treaty. 
2.4 The ECB notes that the draft law does not contain resolution tools as provided for in Title IV of the 
BRRD. In this respect, it will be essential for an eff ective resolution regime that the authority is 
provided with the necessary tools. 
2.5  The ECB notes that the threshold for assuming that a breach of capital requirements is likely, 
which forms the basis for taking early intervention me asures, is not clear in the Austrian draft law 
(8 % plus 1.25 % common equity) and asks for clarification of the intended measure. 
 3. Principle of proportionality 3.1 In Article 1(5) and (12), the draft law provides for a complete exemption from a CI’s obligations to 
establish and update recovery and resolution plans. The FMA may exempt CIs from these requirements if that CI’s insolvency can be presu med not to have any material adverse impact on 
the financial markets, on other CIs or on fundin g conditions. As mentioned in the explanatory 
memorandum accompanying the draft law, the ECB recognises that these provisions will be in line 
with Article 4(1)(a) of the BRRD. However, Ar ticle 4 of the BRRD does not provide for the 
possibility to exclude CIs altogether, but provides on ly for simplified obligations for certain CIs. 
Nevertheless, the ECB acknowledges the ongoing di scussions at the Council and the European 
Parliament on the subject of enabling Member States to waive the requirement to maintain and 
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4 update recovery and resolution plans in certain ca ses, for example in the case of resolution plans if 
the institution is not part of a group or has no branches in other Member States. 
 Regarding the provision in the draft law which allows for exempting smaller CIs from resolution 
planning, the ECB is of the view that it is possible to extend the requirement of resolution planning to all CIs, while simplifying the planning requirements for smaller CIs. However, the ECB understands that the consulting authority inte nds to address a possible concern relating to 
proportionality and does not wish to overburden small CIs. In this respect, the ECB recommends that any exemptions pursuant to Article 1(5) and (12) of the draft law are granted only under very 
strict conditions in accordance with the proportionality principle of the BRRD.  
3.2 In connection with the principle of proportiona lity, and without prejudice to the above comments, 
the ECB also notes that the definitions used in Ar ticles 5(2) and 12(2) of the draft law, under which 
the FMA may exempt a CI from establishing or updating a recovery or resolution plan, are rather vague. In the interests of legal certainty, the ECB recommends defining clear and specific criteria, e.g. size, business models and interconnectedness,  which would enable the FMA to exempt a CI 
from establishing or updating recovery and resolution plans. 
 4. Establishment and assessment of resolution plans  4.1 In Article 1(11), the draft law requires CIs to pr epare a resolution plan and submit it to the FMA. 
The ECB notes that this approach differs from the one currently being discussed at Union level in 
the context of the BRRD, under which the resolution authorities, in consultation with the competent 
authorities, are responsible for drawing up the resolution plans. Under the BRRD, the resolution 
authority would, while drawing up the resolution pl an, be responsible for assessing the resolvability 
of the CI or group, and would have the power to  address impediments to its resolvability. The ECB 
notes that this approach is in line with the Financial Stability Board (FSB) Key Attributes of 
Effective Resolution Regimes, which also requi re the resolution planning and resolvability 
assessment to be conducted by the resolution authority itself
6. Resolution planning and 
resolvability assessment are essential to ensuring the e ffectiveness of resolution. They are therefore 
key tasks of the resolution authority, which w ill safeguard the quality of  the planning and the 
assessment, as well as the instituti onal readiness to take resolution action if needed. The draft law 
could be further aligned with the FSB Key Attri butes (as reflected in the BRRD). In any case, the 
ECB deems it of paramount importance to ensure the same high quality of the respective resolution 
plan. 
4.2 The ECB notes that the parts of the draft law d ealing with early intervention do not grant the FMA 
all the powers provided for in this area by the BRRD, as set out in Article 23 et seq.  thereof. These 
provisions should be aligned with the BRRD once the BRRD is adopted. The ECB notes that, in 
                                                            
6  Key Attributes of Effective Resolution Regimes for Fina ncial Institutions, October 2011, Financial Stability Board, 
points 10.1 and 11.4(ii) http://www.financials tabilityboard.org/publications/r_111104cc.pdf. 
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5 the absence of a resolution mech anism, an assessment of resolvability of a CI or group will be 
carried out on the basis that normal insolvency pro cedures will apply in the event of its winding up. 
This constitutes a more rigorous benchmark than an  assessment of resolvabilit y in which the use of 
resolution tools may be assumed. 
 5. Access to central bank liquidity in the context of recovery and resolution planning 
The ECB notes that Article 1(6)(6) of the draft law provides that recovery plans shall not assume any 
access to or receipt of extraordinary public financial support, but that they shall include an analysis of 
how and when an institution may apply for the use of  central bank facilities in stressed conditions, and 
what may be used as collateral. The ECB wishes to underline that this provision should not in any way affect the competence of central banks to decide independently and at their full discretion on the 
provision of central bank liquidity to solvent credit institutions, both through standard monetary policy 
operations as well as emergency liquidity assistance, with in the limits imposed by the monetary financing 
prohibition under the Treaty
7. Similarly, the ECB also notes that, pursuant to Article 1(14)(1)(9) of the 
draft law, the resolution plan must contain an e xplanation from the institutio n as to how the resolution 
options should be financed without assuming any ex traordinary public support. The ECB recommends 
clarifying the point that resolutio n options may not assume the granti ng of emergency liquidity assistance 
by the central bank8. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 11 April 2013. 
 
[signed] 
 
The Vice-President of the ECB 
Vítor CONSTÂNCIO 
 
                                                            
7  See ECB CON/2012/99, paragraph 3.2. 
8  See Amendment 6 in the Annex to ECB CON/2012/99.