The recovery capacity is the maximum financial benefits that could be achieved by implementing the most effective and sufficiently credible combination of recovery options under different types of stress scenarios.
9.2
The combination of recovery options must consider the dependencies between them and the viability of the post-recovery business model.
9.3
Actual recovery capacity is based on the Financial Institution’s currently available recovery options. Potential recovery capacity is based on planned improvements to the effectiveness of existing recovery options, or the creation of new options whereconcrete steps have already been taken for their development.
9.4
The recovery plan must describe planned improvements to recovery options with details of the expected timeline and concrete steps that have already been taken for their development.
9.5
With respect to a Financial Institution’s recovery capacity, the recovery plan must include an assessment of:
9.5.1
the actual recovery capacity, and its potential recovery capacity where relevant, measured in both monetary terms and relevant regulatory metrics;
9.5.2
the contribution of each recovery option;
9.5.3
the timeline for implementation of each recovery option; and
9.5.4
the timeline for the impact of the capital and liquidity benefits of each recovery option.
9.6
For Banks, the minimum regulatory metrics to measure recovery capacity must comprise the common equity tier 1 ratio, leverage ratio, liquidity coverage ratio and net stable funding ratio, or eligible liquid asset ratio and loans and advances to stable resources ratio where relevant.
9.7
For Insurance Companies, the minimum regulatory metrics to measure recovery capacity must comprise the solvency ratios, the liquidity ratios and earnings ratios.
9.8
The Financial Institution may present a range of recovery capacities on the basis of a range of potential impacts and timelines for each recovery option of its recovery capacity assessment.