EBA publishes Handbook on valuation for purposes of resolution

On 22 February, the European Banking Authority (EBA) published a Handbook on valuation for purposes of resolution, addressed to the national and EU resolution authorities. The basis for this initiative is Article 29(2) of Regulation (EU) No 1093/2010 establishing the EBA. Even though it is not binding for the resolution authorities, this Handbook is an instrument to promote convergence of approaches, practices and processes and, moreover, to make the interaction between independent valuers across the EU more effective. 

The Handbook has been drafted with an intention to bridge the resolution regulatory approach with the valuation practices. This will be achieved by providing solid guidance concerning the practical steps that a valuation process should follow, the particular valuation criteria on various resolution tools and by defining the content that should be included in a valuation report, so as to assist resolution authorities in their decision-making processes. The Handbook focuses on the valuation before resolution (not excluding, however, the after-resolution stage). In this way, the interests of the shareholders and creditors are better served, as the quality of the resolution decision, which has an undoubtful impact on them, improves. 

EBA has already exercised regulatory activity in the area of valuation for resolution (Regulatory Technical Standards (RTS) on valuation before resolution, RTS on valuation after resolution, RTS on valuation of derivative liabilities for purposes of bail-in and RTS on independent valuers) which indicates its commitment  to harmonize the parameters of valuations carried out across the EU.