This paper sets out how banks can address the challenge of
becoming resolvable by improving their performance in six areas
– so-called 'resolvability drivers.'
Overview and key findings
Addressing the issue of too-big-to-fail (TBTF) banks has been
the overriding aim of financial services policy since the economic
downturn. At the core of this effort is the goal of making banks
"resolvable" in distress, to reduce the risk of having to
bail them out. What resolvability means in practice and how it will
be interpreted in detail remains though one of the more elusive
pieces in the post-crisis regulatory puzzle. Yet banks need clarity
and soon in order to be able to adequately plan and deliver the
significant operational, structural and business model changes
The paper sets out our view on what "good" looks like
for banks trying to achieve resolvability, identifying six
'resolvability drivers' that they must address to meet
resolution authorities' expectations:
Simplifying legal entity
Reducing operational complexity
Enhancing the credibility of
Improving liquidity management
Rationalising and justifying global
Enhancing data quality, reporting and
Although driven by regulation and unavoidably a costly and
time-consuming exercise, becoming resolvable should not only be
dealt with as a matter of regulatory compliance. We believe that
there is potentially considerable commercial benefit that banks can
extract from investing in their resolvability, particularly through
improved capabilities, becoming more efficient and competitive, and
through the prospect of less intrusive supervisory scrutiny.
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