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Report BFA - Bankia 2015 / Risk managementCapital planning and recovery plan

Following the recommendations of the main international regulatory and supervisory bodies and in line with the European Banking Union project, in February 2015 the Board of Directors approved the Capital Planning Framework. Together with the Risk Appetite Framework (approved in 2014, setting maximum risk levels and establishing monitoring and responsibility mechanisms), the Capital Planning Framework defines the group’s strategic lines of action in normal business conditions.

As a complementary measure, in February 2015 the Board approved the Recovery Plan, which determines the measures that may be taken in a hypothetical crisis situation. The plan would be activated if any of the selected indicators (which coincide in their definition with the indicators used to set tolerance levels in the Risk Appetite Framework) exceeded the level set in the plan.

Subsequently, in July 2015 the Board of Directors approved certain amendments to the statement of the Risk Appetite Framework, specifying its relationship with the Strategic Plan, the business model, capital planning, the Recovery Plan and the budget. The Board also approved a statement of risk appetite and tolerance in terms of recurring and extraordinary return and a set of additional qualitative benchmarks that serve to determine more precisely and in more detail the level of risk the bank is willing to assume.

At the same time, in 2015 the bank set about preparing the internal capital adequacy assessment (ICAAP) and internal liquidity adequacy assessment (ILAAP) processes, in accordance with the new ECB criteria. Both processes are also very relevant within the framework of the Banking Union project.