BaFin Starts Consultation on Recovery Plans for Banks

On November 2, 2012, the German banking regulator BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) started a consultation among market participants regarding its draft release on Minimum Requirements for Recovery Plans (Mindestsanforderungen an die Ausgestaltung von Sanierungsplänen) (the “Draft Release”). The Draft Release is modeled on the requirements applicable to recovery plans set forth in the “Key Attributes of Effective Resolution Regimes for Financial Institutions” published by the Financial Stability Board on November 4, 2011, and preempts in part the implementation into German law of the European Crisis Management Directive, a draft of which was published by the European Commission on June 6, 2012. It introduces, for the first time in Germany, a requirement for certain systemically important German banks to prepare a recovery plan and update it annually. This exercise can be expected to become a major project for affected banks.

Please find attached an alert memorandum summarizing the Draft Release, and highlighting some of the questions raised by it. The alert memorandum also includes a comparative overview of the draft European Crisis Management Directive and the existing German legal regime dealing with the crisis management of financial institutions. Please feel free to distribute the attached materials within your institution as you see fit.

According to recent press reports, the German legislator is also working on a draft bill requiring German banks to prepare living wills. It is yet unclear whether the recovery plans which are the subject of the Draft Release will become part of the living wills to be introduced with the draft bill.

Should you or your colleagues have any questions in connection with the German or EU crisis management regime, please feel free to contact Dr. Gabriele Apfelbacher (gapfelbacher@cgsh.com) or Michael Kern (mkern@cgsh.com) at the Frankfurt office of Cleary Gottlieb or any of our partners and counsel listed under “Germany”, “Lawyers in this Practice”, under the “Practices” section, “Regions”, of our website at www.clearygottlieb.com.