S.L. 330.9 Art. 6Assessment of recovery plans. S.L. 371.16 S.L. 370.15

(1) Institutions required to draw up recovery plans under regulation 5(1) and regulation 7(1) shall submit the recovery plans to the Authority for review. The institution shall demonstrate to the satisfaction of the Authority that those plans meet the criteria set out in sub-regulation (2).

(2) The Authority shall, within six months from the submission of each recovery plan, and after consulting the relevant European regulatory authorities where significant branches are located, review it and assess the extent to which it satisfies the requirements laid down in regulation 5 and the following criteria:

(a) the implementation of the arrangements proposed in the plan is reasonably likely to maintain or restore the viability and financial position of the institution or of the group, taking into account the preparatory measures that the institution has taken or has planned to take;

(b) the plan and specific options within the plan are reasonably likely to be implemented quickly and effectively in situations of financial stress and avoiding to the maximum extent possible any significant adverse effect on the financial system, including in scenarios which would lead other institutions to implement recovery plans within the same period.

(3) When assessing the appropriateness of the recovery plans, the Authority shall take into consideration the appropriateness of the institution’s capital and funding structure to the level of complexity of the organisational structure and the risk profile of the institution.

(4) The Authority shall provide the recovery plan to the Resolution Committee. The Resolution Committee shall examine the recovery plan with a view to identifying any actions in the recovery plan which may adversely impact the resolvability of the institution and make recommendations to the Authority with regard to those matters.

(5) (a) Where the Authority assesses that there are material deficiencies in the recovery plan, or material impediments to its implementation, it shall notify the institution or the parent undertaking of the group of its assessment and require the institution to submit, within two months, extendable with the Authority’s approval by one month, a revised plan demonstrating how those deficiencies or impediments are addressed: Provided that, before requiring an institution to resubmit a recovery plan, the Authority shall give the institution the opportunity to state its opinion on that requirement.

(b) Where the Authority does not consider the deficiencies and impediments to have been adequately addressed by the revised plan, it may direct the institution to make specific changes to the plan.

(6) (a) If the institution fails to submit a revised recovery plan, or if the Authority determines that the revised recovery plan does not adequately remedy the deficiencies or potential impediments identified in its original assessment, and it is not possible to adequately remedy the deficiencies or impediments through a direction to make specific changes to the plan, the Authority shall require the institution to identify within a reasonable time-frame changes it can make to its business in order to address the deficiencies in or impediments to the implementation of the recovery plan.

(b) If the institution fails to identify such changes within the time-frame set by the Authority, or if the competent authority assesses that the actions proposed by the institution would not adequately address the deficiencies or impediments, the Authority may direct the institution to take any measures it considers to be necessary and proportionate, taking into account the seriousness of the deficiencies and impediments and the effect of the measures on the institution’s business.

(c) The Authority may, without prejudice to regulation 9 of the Banking Act (Supervisory Review) Regulations and regulation 16 of the Investment Services Act

(Supervisory Review) Regulations, direct the institution to:

(i) reduce the risk profile of the institution, including liquidity risk;

(ii) enable timely recapitalisation measures;

(iii) review the institution’s strategy and structure;

(iv) make changes to the funding strategy so as to improve the resilience of the core business lines and critical functions;

(v) make changes to the governance structure of the institution:

Provided that such measures do not preclude the Authority from taking additional measures under Maltese law.

(7) When the Authority requires an institution to take measures according to sub-regulation 6, its decision on the measures shall be reasoned and proportionate, and the decision shall be notified in writing to the institution and shall be subject to a right of appeal.