Categories of recovery plan indicators

Institutions should include in the recovery plan at least the following mandatory categories of recovery plan indicators as further specified in these guidelines:

• a. capital indicators;
• b. liquidity indicators;
• c. profitability indicators;
• d. asset quality indicators.

Institutions should include in the recovery plan the two following categories of recovery plan indicators as further specified in these guidelines, unless they provide satisfactory justifications to the competent authorities as to why such categories are not relevant to the legal structure, risk profile, size and/or complexity of the institution (i.e. a rebuttable presumption):

• a. market-based indicators;
• b. macroeconomic indicators.

Institutions should include specific recovery plan indicators included in the list per category provided in Annex II to these guidelines, unless they provide satisfactory justifications to the competent authorities as to why such specific indicators are not relevant to the legal structure, risk profile, size and/or complexity of the institution or they cannot be applied due to characteristics of the market in which the institution operates (i.e. a rebuttable presumption).

When an institution is rebutting the presumption as set out in paragraph 23 for any of the indicators specified in Annex II, where possible it should replace it with another indicator from the same category which is more relevant for this institution. Where replacement is not possible for each indicator from Annex II, institutions should include in their recovery plans at least one indicator from each of the categories set out in paragraph 21.

Institutions should not limit their set of indicators to the minimum list set out in Annex II, and should give consideration to the inclusion of other indicators following the principles and in line with the description of the categories laid down in these guidelines. With this aim, Annex III includes a non-exhaustive list with examples of additional recovery plan indicators broken down by categories.

The framework of recovery plan indicators should:

• a. be adapted to the business model and strategy of an institution and be adequate to its risk profile. It should identify the key vulnerabilities most likely to impact the institution’s financial situation;
• b. be adequate to the legal structure, size and complexity of each institution. In particular, the number of indicators should be sufficient to alert the institution of deteriorating conditions in a variety of areas. At the same time, this number of indicators should be adequately targeted and manageable by institutions;
• c. be aligned with the overall risk management framework and with the existing liquidity or capital contingency plan indicators, and business continuity plan indicators;
• d. allow for regular monitoring and be integrated into the institution’s governance and within the escalation and decision-making procedures; and
• e. include forward-looking indicators.