Question
What does the reference to the ‘initial’ recovery plan’ in Article 27(1)(a) of Directive 2014/59/EU (BRRD) mean? Is it the first recovery plan or does it relate to subsequent recovery plans?
Background on the question
The reference to the ‘initial’ recovery plan’ in English means the first recovery plan that a firm provides. Firms are obliged to update the plan annually, and more frequently where there is a material change (Article 5(2) of the BRRD). How does the Commission expect Member States to implement the reference to the ‘initial plan’? If the Member State applies it literally, it would require the supervisor to consider the first plan even if it has long been superseded. The Member State assumes it would mean a reference to the current recovery plan.
Answer
The "initial" recovery plan refers to the current available version of the recovery plan, which can be either the recovery plan "as last amended" in case it has been updated already or the plan that has not been updated yet; that is the reason for the cross reference to Article 5(2) under Article 27(1)(a) of the BRRD. This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.