Report on recovery plans dry runs

General Information

This report, published in April 2026 by the European Banking Authority (EBA), analyzes the simulation practices of recovery plans ("dry runs") in 16 large European banking groups from 10 European Union countries. It is part of the European regulatory framework under the BRRD and aims to assess the maturity and effectiveness of recovery plan testing exercises, without providing prescriptive guidelines, but by identifying best practices and contributing to the development of useful benchmarks for institutions and supervisory authorities (p. 1-7).

Executive Summary

The subject concerns the comparative analysis of dry run practices of recovery plans in European banks, a key element of the crisis management framework under the BRRD. These exercises, although not explicitly required by regulation, are recognized as effective tools to strengthen the operationality of recovery plans and crisis preparedness. The report notes great diversity in approaches and maturity levels: some institutions conduct formal exercises integrated into governance, while others carry them out more superficially, often to satisfy regulatory expectations, with little involvement from senior management. Identified best practices include the development of multi-year roadmaps, clear definition of objectives and scope, involvement of various functions, and formalization of feedback with action tracking. Even mature plans benefit from these tests, which improve the credibility and feasibility of recovery measures. The report recommends continuing the development of these exercises, improving their integration with resolution tests, and increasing the participation of competent authorities to strengthen crisis management continuity (p. 4).

Context and Objectives

The report responds to the need to deepen the operational testing phase of recovery plans, after nearly a decade of experience in designing these plans and the recent consolidation of the European regulatory framework, notably with updates to the EBA guidelines on recovery indicators and overall recovery capacity. The 2023 banking events highlighted the importance of robust preparation and credible, feasible recovery options. The objective is to assess current dry run practices in a sample of 16 cross-border banking groups, focusing on governance, scope, preparation, execution, and lessons learned, to identify best practices and areas for improvement, without issuing binding regulatory recommendations (p. 5-7).

Summary of Key Points by Theme

Governance of dry runs: Two-thirds of banks have conducted dry runs, but some did not carry them out in 2024 despite authorities' expectations, planning these exercises for 2024 or 2025. Internal governance is often poorly detailed, with initiatives coming from recovery units and limited involvement of senior management, often ad hoc. Frequency varies from annual to ad hoc, sometimes governed by a multi-year roadmap approved by the board, progressively covering plan components (p. 8-9).

Scope of exercises: Objectives are generally defined before the exercise, aiming to test the operational feasibility of recovery options (notably related to liquidity, such as collateral mobilization, debt issuance, asset sales), escalation and decision-making, as well as awareness and training. Internal/external communication is less often tested. No exercise covers the entire plan at once, justifying the multi-year roadmap. Scenario selection is guided by external expectations or the internal roadmap (p. 10-11).

Preparation and execution: Preparation time varies from a few weeks to several months, execution lasts from a few hours to several days depending on complexity. Responsibility lies with the recovery unit, in coordination with other functions (finance, IT, communication). Prior training is rare to preserve the element of surprise, except for complex exercises involving international subsidiaries. Integration with resolution exercises is limited but identified as good practice. Authorities are generally informed afterwards, with more frequent participation of central banks to test liquidity facilities. External observers may be mobilized in advanced programs (p. 12-13).

Results and lessons learned: Results are generally included in recovery plan submissions, often in a synthetic manner. Lessons learned concern improving governance (management and committee involvement), specification of options (preparations and operational phases), and interactions with supervisors. Poorly documented exercises generate few lessons. Best practices include detailed documentation, sharing results with management and observers, and formalizing an action plan with priorities and responsible parties (p. 15-16).

Main Findings and Lessons Learned

Findings: The majority of institutions recognize the value of dry runs to strengthen recovery plan implementation and crisis preparedness. Practices are very heterogeneous, with formal and integrated exercises in some institutions, and more superficial approaches in others. Exercises reveal areas for improvement in governance, option feasibility, and communication.

Hypotheses: Dry run maturity depends on bank size, complexity, business model, as well as management involvement and supervisory expectations.

Interpretations: Dry runs conducted solely to satisfy regulatory requirements without clear objectives or strong commitment tend to be unproductive. Conversely, those integrated into risk management bring tangible benefits, improving credibility and organizational understanding of plans.

Uncertainties: The optimal degree of authority involvement and the best articulation between recovery dry runs and resolution exercises remain to be defined. The impact of institutional differences on practices requires further study (p. 4, 8-17).

Conclusions and Recommendations

The report concludes that dry runs are a valuable tool to improve recovery plan implementation and crisis preparedness. It emphasizes the need to continue and enhance these exercises, notably by developing multi-year roadmaps, clarifying objectives, increasing senior management involvement, and formalizing feedback with action tracking. Strengthening cooperation between authorities and integrating recovery and resolution tests are also recommended to optimize resources and exercise consistency. Finally, institutions are encouraged to maintain regular and quality testing, even for already mature plans, to consolidate their capacity to manage crises effectively (p. 17-18).