Resolvability assessment framework: legal entities
The financial crisis highlighted the need for banks to be better prepared to recover from severe stress events and for the authorities to have effective tools to enable resolution (2021) and recovery (2022).
Resolution authorities have been requested to develop a strategy for bank failure management, with minimum disruption for financial stability. The Bank of England is the lead resolution authority for our client. We were therefore contracted to lead the delivery in a numbered areas across recovery and resolution planning (RRP).
We provided business analysts assigned to legal entities and to the resolvability assessment framework (RAF) workstreams, including: financial market infrastructures, infrastructure contractual stays, operational continuity in resolution, financial interdependencies, minimum requirement for eligible liabilities, restructuring, funding in resolution, valuations in resolution and management, governance and communication in resolution.
The team coordinated the legal entity review and provided feedback on workstream artefacts (e.g. TOMs, processes and RACIs) to validate entity impacts, facilitating workshops and address any challenges raised.
We also developed a resourcing plan to cover agreed business as usual (BaU) RRP activities at local and regional levels using an offshore model. A governance structure was also implemented to ensure deliverables are submitted on time and according to the Group’s requirements.
The solution and key benefits
The legal entities team reviewed:
- The Group self-assessment;
- Multiple TOMs (including FMI, Stays contingency plan, communications framework; and
- Multiple runbooks (including MGC, MREL and FiR).
We were able to leverage our understanding of the regulations and Group requirements to support local and regional teams to develop their documentation to the appropriate standard.
As a result of this project, we enabled increased synergies between the legal entities and Group, facilitating strong communication and ensuring workstreams transitioned to BaU.