The European Banking Authority published today its first Report on the functioning of resolution colleges. The Report summarises the EBA's assessment of the quality of the colleges' organisation, discussions held and general output. Overall, the Report finds that good progress has been achieved since the introduction of the

Bank Recovery and Resolution Directive (BRRD) in 2015, also considering that most colleges are only in their second year of operation. However, the Report also notes that resolution is a complex matter which requires further progress and continued effort to ensure college members are well prepared to deal with the failure of a cross-border bank. 

The Report found that in 2017, resolution authorities were broadly compliant with the regulations regarding the operational aspects of colleges. In particular, their level of engagement has progressively intensified and they have managed to meet most of the deadlines for reaching joint decisions. Nevertheless, there remain scope for improvement. The EBA stresses that colleges meetings are required to take place at least once a year, that resolution planning information should be properly circulated ahead of the meetings and that minutes should be promptly shared with members after the meetings.

The quality of the observed discussions has improved over the last two years with noticeably greater contribution from host authorities. However, the Report identifies that the quality varied between meetings and that additional progress is needed in some important areas, such as the interlinkages between recovery and resolution.

Also, the quality of college outputs has improved. In 2017, the college members discussed and reached joint decisions on resolution plans and resolvability assessments as well as on consolidated MREL for most of the colleges monitored. In addition, the EBA observed progress on the removal of impediments, with banks building up their levels of MREL-eligible debt as well as making progress in the inclusion of robust resolution clauses in their contracts for critical services. 

Nonetheless, more remains to be done to ensure college members are prepared for highly stressed situations. In particular, the Report identifies that, (i) most resolution plans need further improvement in some key operational aspects; (ii) progress is needed in removing impediments to resolvability and, (iii) MREL needs to be set at solo level to ensure an adequate distribution of loss-absorbing capacity within groups.