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Resolution

Resolution

Pressures build on European banks.

Pressures build on European banks.

Resolution poses many challenges for banks. When designing a commercial banking model with operating structures that are capable of facilitating recovery and resolution, it is essential for banks to understand clearly how to navigate regulatory requirements and what to focus on to meet these challenges.

With the main components of a resolution regime for banks now in place across Europe and the regulatory requirements becoming clearer, banks should ensure that:

  • the various strands of their recovery and resolution planning work are fully joined-up;
  • they have identified and are tackling any remaining impediments to resolvability;
  • they have implemented commercially viable solutions that meet the needs of customers, investors and regulators.

This paper looks at eight areas, identified by the FSB, BoE and SRB, where systemically important banks need to take actions to improve their resolvability. The Bank of England and the Single Resolution Board are ratcheting up their requirements on what these banks need to put in place ahead of resolution, including holdings of loss absorbing capacity, liquidity, valuation preparedness, financial contracts and relationships with financial market infrastructures.

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