Recital (33)

To ensure that preventive measures achieve their objective, credit institutions should be required to present to the competent authority a note outlining the measures that they commit to undertake. That note should contain all elements which aim at preventing the outflow of funds and strengthening the capital and liquidity positions of the credit institution, enabling the credit institution to comply with all the relevant prudential and other regulatory requirements on a forward-looking basis. The note should therefore contain capital-raising measures, including rules on the issuance of rights, the voluntary conversion of subordinated debt instruments, liability-management exercises, capital-generating sales of assets, the securitisation of portfolios, and earnings retention, including dividend bans and bans on the acquisition of stakes in undertakings. Additionally, the note should detail the credit institution’s initial capital shortfall. During the implementation of the measures envisaged in the note, credit institutions should also strengthen their liquidity positions and refrain from aggressive commercial practices, from the distribution of dividends or of variable remuneration, from the repurchasing of own shares, and from calling hybrid capital instruments. The note should also contain a strategy for exiting from the support measures received. Within a reasonable timeframe, the credit institution should provide the competent authority with a business reorganisation plan to secure long-term viability. Competent authorities and resolution authorities are best positioned to assess the relevance and credibility of the measures envisaged in a business reorganisation plan. To ensure that the designated authority of the DGS that is requested by the credit institution to finance a preventive measure is in a position to assess whether all the conditions for preventive measures are fulfilled, the competent authority should cooperate with the designated authority. The further provision of funds to a credit institution should be suspended where the competent authority is not satisfied that the business reorganisation plan is credible and feasible. To ensure a consistent approach to the application of preventive measures across the Union, EBA should issue guidelines to assist credit institutions to draft business reorganisation plans.