Opinion of the European Central Bank of 10 June 2013 on recovery and resolution plans (CON/2013/42)
Date: 2013-06-10
Institutions: European Central Bank
Subjects: Belgium, central bank, company in difficulties, credit institution, economic stabilisation, financial stability, financial supervision, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 10 June 2013 

on recovery and resolution plans 

(CON/2013/42) 

Introduction and legal basis 

On  31  May  2013,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Nationale  Bank  van 

België/Banque Nationale de Belgique (NBB), acting on behalf of the Belgian Ministry of Finance, for an 

opinion on a draft law amending the Law of 22 March 1993 on the legal status and supervision of credit 

institutions and the Law of 22 February 1998 establishing the Organic Statute of the Nationale Bank van 

België/Banque Nationale de Belgique (hereinafter the ‘draft law’). The ECB was requested to deliver an 

opinion  as  a  matter  of  extreme  urgency  to  allow  for  this  element  of  the  Belgian  crisis  management 

framework to be adopted before the Belgian Parliament’s summer recess. 

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  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions1, as the draft law relates to the NBB and contains rules 

applicable  to  credit  institutions  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, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

1.1  The draft law aims to strenghten the ability of Belgian credit institutions and public authorities to 

prevent future financial crises, or to prevent such crises from intensifying, and to react promptly in 

the event of a crisis, by introducing into Belgian law a framework governing the establishment and 

the assessment of recovery and resolution plans for credit institutions. Pending the designation of a 

resolution  authority  in  Belgium,  the  draft  law  temporarily  grants  the  NBB,  in  its  capacity  as 
supervisory authority, certain powers concerning recovery and resolution plans2. 

1.2  Under the draft law, all Belgian credit institutions  must establish and keep up to date  a recovery 

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2  

OJ L 189, 3.7.1998, p. 4. 
Explanatory memorandum, general introduction. 

 
 
 
 
 
                                                      
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plan  detailing  the  measures  susceptible  of  being  taken  by  the  institution  or  its  shareholders  to 

correct a  significant deterioration in its financial position, without having any  significant  adverse 
effects  on  the  Belgian  or  the  international  financial  system3.  These  measures  may  take  various 

forms, and can include increasing the credit institution’s own funds or reducing its risk profile by 

selling  off  branches,  lines  of  business  or  subsidiaries,  but  they  may  not  allow  for  any  form  of 

exceptional  financial  support  from  public  authorities  or  the  central  banks.  To  ensure  that  this 

prohibition is fully effective, the concept of ‘public authorities’ is to be  understood in the widest 

sense and covers, for example, the deposit guarantee scheme, the resolution fund, and the State in 
its capacity  as  shareholder  of  a  credit  institution4.  The  credit  institutions  must  test their  recovery 

plans by comparing them with various crisis scenarios, ranging from a crisis that is specific to an 

institution  to  a  one  that  is  systemic.  Recovery  plans are  to  be  submitted  to  the NBB,  which  will 

assess their compliance with the standards set out in the draft law, taking into account the fact that 
other institutions might also implement a recovery plan in the same period5. The NBB will require 

an institution to revise its recovery plan within three months if it is found to have shortcomings or 

if  there  are  obstacles  to  its  implementation.  If  the  shortcomings  are  not  remedied  within  the 

deadline  provided,  the  institution  will  be  required  to  take  any  measures  that  the  NBB  deems 

necessary  to  remedy  the  situation,  such  as  facilitate  a  reduction  of  the  risk  profile  of  the  credit 

institution concerned, or modify its governance structure. Finally, if a credit institution is found to 

be  in  breach  of  regulatory  requirements,  if  the  manner  in  which  it  is  managed  or  its  financial 

situation  adversely  affect  the  proper  fulfilment  of  its  commitments  or  do  not  offer  sufficient 

guarantees  in  terms  of  its  solvability,  liquidity  or  profitability,  and  where  the  credit  institution 

concerned has no measures in place to remedy the situation as required by the NBB, the NBB has 
the power to request the credit institution to implement all or part of its recovery plan6. 

1.3  The  NBB  must  establish,  and  keep  up  to  date,  resolution  plans  in  respect  of  all  Belgian  credit 

institutions,  which  are  to  outline  the  measures  to  be  taken  in  the  event  of  a  credit  institution’s 
failure  in  order,  in  particular,  to  safeguard  the  continuing  operation  of  its  critical  functions7,  to 

avoid adversely affecting financial stability, and to protect the assets of the depositors covered by 
the deposit guarantee scheme8. Simplified resolution plans may be drawn up depending on (i) the 

potential  impact  of  an  institution’s  failure  on  financial  stability,  or  (ii)  the  existence  of  a  plan  at 

group  level.  The  measures  outlined  in  the  resolution  plan  may  not  take  any  account  of  the 

possibility of exceptional financial support by public authorities or the central banks. The NBB will 

be responsible for assessing the resolvability of credit institutions. If the NBB finds that there are 

obstacles to resolvability, and if it considers the remedial actions proposed by  a credit institution 

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4  
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6  
7  

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Article 6 of the draft law (new Article 45/1 of the Law of 22 March 1993).  
Explanatory memorandum, comment on Article 6. 
Article 8 of the draft law (new Article 45/2 of the Law of 22 March 1993). 
Article 14 of the draft law (new Article 57/1 of the Law of 22 March 1993, referring to Article 57 §1). 
Critical functions are defined as any activities, services and operations the interruption of which  is likely to disrupt the 
economy or the financial system (Article 3 of the draft law, new Article 3 §1 26° of the Law of 22 March 1993). 
Article 11 of the draft law (new Article 55/1 of the Law of 22 March 1993). 

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unsatisfactory, it will have the authority to impose certain measures on the institution in question, 

requiring it, for example, to enter into contracts for services, to limit risk exposure, to assign certain 

assets  or  to  change  its  legal  or  operational  structure.  Where  the  institution  concerned  fails  to 

comply  with the NBB’s request,  it will be considered  to be in breach of  regulatory requirements 
such  that  the  NBB  will  have  the  power  to  require  it  to  implement  its  recovery  plan9.  Until  the 

European  Commission’s  proposal  for  a  Directive  on  the  recovery  and  resolution  of  credit 
institutions and investment firms dated 6 June 201210 (hereinafter the ‘BRRD’) is fully transposed, 

the resolution plans will not be submitted to the Ministry of Finance as this would conflict with the 

professional  secrecy  obligations  which  the  NBB  is  bound  by  in  its  capacity  as  supervisory 
authority11  pursuant  to  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 institutions12. 

2. 

General observations 

2.1  The ECB welcomes the draft law as it strengthens the tools and procedures available to the national 

authorities for planning the recovery and resolution of credit institutions. The approach taken is in 

line with the Financial Stability Board’s (FSB) Key Attributes of Effective Resolution Regimes for 
Financial Institutions13 and the BRRD, whereby recovery and resolution plans are a key element of 

preparation for possible crisis scenarios and for taking swift and effective remedial action. 

2.2  The ECB notes that the Belgian authorities have decided, in advance of the adoption of the BRRD, 

to transpose the provisions which they consider to be close to finalisation and which do not require 

institutional  reform.  The  ECB  understands  that  the  responsibilities  entrusted  to  the  NBB  by  the 

draft law do not take into account the designation of a resolution authority in Belgium, which will 

be  done  at  a  later  stage  once  the  BRRD  is  adopted.  Any  resolution  powers  vested  in  the  NBB 

would  need  to  be  functionally  separate  from  its  current  supervisory  tasks,  in  order  to  ensure 
independence  and  avoid  conflicts  of  interest14.  In  the  event  that  the  NBB  is  not  ultimately 

designated  as  the  resolution  authority,  it  is  important  that  the  designated  resolution  authority 

engages  in an adequate  exchange  of  information  with  the  NBB in its  capacity as  central  bank  as 
well as supervisory authority15. In addition, the ECB understands that, once the BRRD is adopted, 

the framework established under the draft law will be reviewed in order to ensure full consistency 

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10  

11  
12  
13  

14  
15  

Article  14  of  the  draft  law  (new  Article  57/1 of  the  Law  of  22 March  1993,  referring  to  Article  57  §1).  See point 1.2 
above. 
Proposal for a Directive of the European Parliament and of the Council establishing a framework  for the recovery and 
resolution  of  credit  institutions  and  investment  firms  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.  The  ECB  commented  on  this  proposal  in  its  Opinion  CON/2012/99.  All  ECB 
opinions are published on the ECB’s website at www.ecb.europa.eu. 
Explanatory memorandum, general introduction. 
OJ L 177, 30.6.2006, p. 1. 
Key  Attributes  of  Effective  Resolution  Regimes  for  Financial  Institutions,  October  2011,  Financial  Stability  Board. 
Available on the FSB’s website at www.financialstabilityboard.org. 
See also Opinion CON/2013/28, paragraph 2.3. 
See Opinion CON/2012/99, paragraph 3.1. 

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with developments at Union level. 

3. 

Credit institutions subject to the establishment of recovery and resolution plans 

3.1   The ECB welcomes the broad scope of application of the draft law, which will cover all Belgian 

credit institutions, including their branches and subsidiaries both in Belgium and abroad, in terms 
of  the  requirement  for  recovery  and  resolution  plans16.  This  will  allow  all  credit  institutions  to 

benefit from a clear plan for remedial action in the event of emerging difficulties, and will provide 

clarity  regarding  their  resolvability.  The  existence  of  such  plans  for  all  credit  institutions  also 

addresses  potential  concerns  as  regards  ensuring  a  level  playing  field.  The  ECB  notes  that,  to 

balance the extent of the scope of application against the necessary proportionality, the NBB will 

have the power to grant exemptions from the requirement to establish a recovery plan, based on the 

impact that the failure of an institution would have on financial stability or because the institution is 

part of a group for which the competent authorities have already communicated a recovery plan to 
the  NBB17.  It  is  important  to  conduct  a  rigorous  assessment  as  to  why  no  potential  threat  to  the 

system is considered likely in the event of the failure of an institution, demonstrating fully in the 
case in question why recovery planning is considered unnecessary18.  

3.2  The  ECB  notes  that  the  NBB’s  power  to  lay  down  the  minimum  content  of  recovery  plans  in  a 

regulation  will  allow  developing 

international  and  European  standards, 

in  particular 

Recommendation  of  the  European  Banking  Authority  on  the  development  of  recovery  plans 
(EBA/REC/2013/02) dated 23 January 2013, to be taken into account19. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 10 June 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

16  
17  
18  
19  

Articles 6 and 11 of the draft law (new Articles 45/1 and 55/1 of the Law of 22 March 1993). 
Article 6 of the draft law (new Article 45/1 §5 of the Law of 22 March 1993). 
See Opinion CON/2013/28, paragraph 2.1. 
Explanatory memorandum, comment on Article 6. See also Article 5(7) of the BRRD. 

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