ORC score

Competent authorities should assess the ‘adjusted ORC’ specified in accordance with paragraphs 39 and 40, assigning the following levels considering the ‘relevant RP indicators’ thresholds and the related regulatory requirements:

• a. ‘satisfactory’ – in cases where the ‘relevant RP indicators’ of the institutions after the inclusion of the ‘adjusted ORC’ are above their thresholds defined in line with the Guidelines on recovery plan indicators;
• b. ‘adequate with potential room for improvement ’ – in cases where the ‘relevant RP indicators’ of the institutions after the inclusion of the ‘adjusted ORC’ would fail to be above the thresholds defined in line with the Guidelines on recovery plan indicators, but they would still be equal to or higher than institutions’ capital including leverage and liquidity regulatory requirements referred to in paragraph 20 adding all applicable regulatory buffers;
• c. ‘weak’ – in cases where the ‘relevant RP indicators’ of the institutions after the inclusion of the ‘adjusted ORC’ would fail to meet the institutions’ capital (including leverage) and liquidity regulatory requirements referred to in paragraph 20 adding all applicable regulatory buffers.

In cases where the ‘adjusted ORC’ would result between different levels under paragraph 41, competent authorities should select the most appropriate classification taking into consideration, in particular, the severity of the scenarios and the number of ‘relevant RP indicators’ positioned at the different levels.

To complement their ORC assessment, competent authorities should take into account general qualitative considerations, not already reflected in the ‘adjusted ORC’, on the ORC framework. This may result in an upward or downward adjustment of the indicative scoring under paragraph 41 by the competent authorities when they consider that it does not fully represent the ORC position of the institutions, taking into account, in particular, the following elements:

• a. the difference between institutions’ ORC determination and the competent authorities ‘adjusted ORC’;
• b. overall evidence or lack of past implementation experience;
• c. the presence or absence of any preparatory measure ahead of the implementation of options;
• d. additional information related to the level of concentration, the timeframe for implementation, the feasibility and credibility of the recovery options as well as the level of stress applied by the institutions;
• e. institutions’ ability with regard to data availability, quality and aggregation as well as institutions’ governance in terms of crisis management preparedness.

‘Weak’ ORC should lead either to the assessment of a material deficiency in the recovery plan in accordance with Article 6 of Directive 2014/59/EU or to the identification of a specific area of improvement related to the ORC in the competent authorities’ assessment of the institutions’ recovery plan.

‘Adequate with potential room for improvement’ ORC may lead to the identification of a specific area of improvement related to the ORC in the competent authorities’ assessment of the institutions’ recovery plan.

When carrying out the assessment of the identification of a material deficiency or a specific area of improvement in the recovery plan related to the ORC according to paragraphs 44 and 45, competent authorities should take into account the following non-exhaustive situations:

• a. whether the institution already operates in severe stressed conditions, including where a capital conservation plan in accordance with Article 142 of Directive 2013/36/EU has been requested;
• b. whether the institution has already improved the ORC compared to previous recovery plans and there is no longer room for ORC potential improvement given the size, business model and risk profile of the institution;
• c. whether the institution’s capital, leverage and/or liquidity position displays sound headroom with respect to the regulatory requirements and therefore the scenarios employed by the institution are extremely severe and thus too penalising with respect to peers.

The classification referred to in paragraphs 41 to 43 should support the assessment of the ORC by competent authorities as a relevant component of their overall recovery plan assessment.