Recital (10)

It is necessary to ensure timely action and early coordination between the competent authority and the resolution authority while an institution or entity is still a going concern but there is a material risk that the institution or entity might fail. The competent authority should therefore notify the resolution authority as early as possible of such a risk. That notification should contain the reasons for the competent authority’s assessment and a non-exhaustive overview of the alternative private sector measures, supervisory action or early intervention measures that are available to prevent the failure of the institution or entity within a reasonable timeframe. Such early notification does not affect any alternative private sector measures, including measures by an IPS, that would prevent the failure or the likely failure of the institution or entity within a reasonable timeframe or prejudice the procedures to determine whether the conditions for resolution are met. The prior notification by the competent authority to the resolution authority of a material risk that an institution or entity is failing or is likely to fail or the end of the specified timeframe for the implementation of the measures to address such material risk should not be a condition for, or otherwise necessarily imply, a subsequent determination that an institution or entity is failing or is likely to fail. Moreover, if at a later stage the institution or entity is assessed to be failing or likely to fail and there are no alternative solutions to prevent such failure within a reasonable timeframe, the resolution authority has to take a decision on whether to take resolution action. In such a case, the timeliness of the decision to apply resolution action to the institution or entity can be fundamental to the successful implementation of the resolution strategy, in particular because an earlier intervention in the institution or entity can contribute to ensuring sufficient levels of loss absorption capacity and liquidity to execute that strategy. It is therefore appropriate to enable the resolution authority to assess, in close cooperation with the competent authority, what constitutes a reasonable timeframe to implement alternative measures to avoid the failure of the institution or entity. To ensure a timely outcome and to enable the resolution authority to prepare properly for the potential resolution of an institution or entity, the resolution authority and the competent authority should meet regularly, and the resolution authority should decide on the frequency of those meetings, having regard to the circumstances of the case.