64. When requested to demonstrate how they can segregate distressed assets, institutions should …

When requested to demonstrate how they can segregate distressed assets, institutions should highlight how their actions will:

• - Facilitate any diagnostic exercise as referred to in EBA guidelines on tests, reviews or exercises that may lead to support measures²¹ as most of the distressed assets would be centralised in one dedicated business unit;
• - Allow a proper identification of contractual barriers, legal requirements attached to the distressed assets and other sorts of transfer impediments;
• - Provide for an easier valuation of the distressed assets (and consequently of the non-distressed business lines supporting the choice of the complementary resolution tool);
• - Create a high level of expertise within the business unit for dealing with distressed assets;
• - Lead to the development of a dedicated data set covering the collateral and right issues related to the distressed assets;
• - Highlight the specific services required for these items and start implementing the arrangements to manage them;
• - Lead to segregate the needed resources (including financial or staff) which could then be more easily transferred at the point of resolution, notably with help of servicing arrangements.

²¹ EBA Guidelines on the types of tests, reviews or exercises that may lead to support measures under Article 32(4), point (d)(iii) of the Bank Recovery and Resolution Directive (EBA/GL/2014/09).

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/