Resolvability

Resolution Planning

The 2023 bank failures involving Silicon Valley Bank (SVB) and Credit Suisse prompted regulatory investigations into lessons learned from these incidents. These failures highlighted that even banks not identified as systemically important can still be systemically significant or critical upon failure.

The Bank of England summarised the lessons learned in the following 4 ways:

1. Regulatory framework must prioritize resilience where it is most needed – and do so in a robust, credible, and fair manner.
2. Financial resources are important, but they are not everything a firm needs to survive.
3.  There is more work to do to ensure that firms can fail in a controlled, non-contagious manner.
4. Consider the implications of recent failures for the regulation and supervision of smaller firms and international branches.

Recovery Planning

In its industry feedback in May 2024; regarding the thematic review of non-systemic firms’ recovery plan, the PRA further emphasized the significance of banks and building societies’ resolvability and recovery planning. The PRA also highlighted the critical role of banks and building societies’ recovery capabilities in maintaining financial resilience during stress.

Solvent Exit

Starting from October 2025, non-systemic banks and building societies in the UK will be obligated to prepare for a solvent exit as part of their business-as-usual (BAU) operations, and to demonstrate their preparedness to execute a solvent exit. Encouragingly, such firms may leverage previous implementations made under their existing recovery planning regime to meet regulatory expectations.

How can we help?

Our subject matter experts possess a wealth of experience supporting financial institutions in wind down, recovery, and resolution planning. They come from a diverse range of backgrounds, with some having worked directly for the FCA or PRA, or within the regulatory reporting and risk management functions in other institutions.

We provide bespoke wind-down, solvent exit, recovery, and resolution planning services, comprising a detailed, expert-led review on the implementation of regulatory expectations. This can provide the level of assurance that banks’ and investment firms’ management bodies can rely on.

Our solutions cover the following areas:

•  Support in Developing, Designing, or Implementing Regulatory Expectations for Recovery and Resolution Planning: We can assist you throughout the process of creating and designing your Solvent Exit, Wind-down, Recovery, and Resolution Plans. This includes reviewing your approach to defining and monitoring EWIs and implementing regulatory expectations related to recovery and resolution planning.
• Scenario Analysis and Stress Tests: We can assist you in developing scenario analyses and stress tests that accurately reflect the risks your business faces. These assessments are crucial for effective planning.
• Resolution Policies, Control Processes, and Governance Mechanisms: We can review your resolvability framework against regulatory expectations and industry best practices. This alignment is essential for robust planning.
• Operational Effectiveness Testing: Our team of experts can assess the embeddedness of your Wind-down, Recovery, and Resolution Plans. This evaluation helps determine the Plan’s operational effectiveness.