What it is
A group recovery plan is a recovery plan prepared for a whole banking group rather than for a single institution. It is drawn up by the ultimate parent undertaking and covers the group as a whole together with its individual entities, identifying the measures that could be taken to restore the financial position of the group or of specific members following a significant deterioration. It is the group-level counterpart to the recovery plan required of stand-alone institutions.
What it contains
Like an individual recovery plan, a group recovery plan sets out a menu of credible recovery options — such as raising capital, disposing of assets or business lines, reducing risk, or restructuring liabilities — that management could deploy under stress. It is built around a framework of recovery indicators that signal when the plan's escalation and decision-making processes should be triggered, and it is tested against a range of severe but plausible financial and macroeconomic scenarios.
What distinguishes the group plan is its perspective. It must consider how recovery measures would work across the group, including arrangements for intra-group financial support and the coordination of actions between the parent and its subsidiaries. It must aim, where possible, at the stability of the group as a whole and of individual entities, and it should identify potential impediments to implementing measures within the group, including practical or legal obstacles to moving capital or liquidity between entities.
How it is agreed
A group recovery plan is submitted by the parent to the consolidating supervisor and assessed jointly by the authorities responsible for the group's entities. The framework provides for a joint decision among the relevant competent authorities on the plan and on any measures required to address deficiencies, reflecting the cross-border nature of many banking groups. Depending on the group's structure, authorities may in defined circumstances require an entity to draw up an individual recovery plan as well.
Legal basis
Group recovery plans are governed by the Bank Recovery and Resolution Directive, principally the recovery-planning provisions dealing with group plans and their assessment. The Directive requires the ultimate parent to prepare and submit the group plan, sets out what it must cover, and establishes the joint assessment and decision process among the competent authorities. These sit within the broader recovery-planning regime that also applies to individual institutions.
Relevance for resolution and investors
Recovery planning is the going-concern stage of the crisis-management framework: it addresses what a group can do to help itself before authorities need to consider resolution. A credible group recovery plan can prevent a deterioration from escalating to the point where the group, or entities within it, would meet the conditions for resolution. The plan's mapping of intra-group support and impediments also informs later resolution work, because the same obstacles to moving resources within a group bear on how a resolution group can be stabilised.
For investors and analysts, group recovery plans are largely confidential, but their existence and the group's identified recovery capacity are part of assessing how resilient a group is likely to be under stress and how dependent particular subsidiaries are on parental support.