UK Regulators Consult on the Resolvability Assessment Framework for Banks

The Bank of England and Prudential Regulation Authority have launched a package of consultations on proposals for the U.K.'s resolvability assessment framework for banks, with the aim of meeting the BoE's commitment to ensure that all banks are resolvable by 2022. The PRA consultation is relevant for U.K. banks and building societies with £50 billion or more in retail deposits on an individual or consolidated basis. The BoE's consultation is wider in scope and affects all firms with bail-in or partial-transfer resolution strategies and material U.K. subsidiaries of an overseas-based banking group. Responses to the consultations should be submitted by April 5, 2019.

The BoE is consulting on its proposed approach to assessing resolvability and its proposals to increase transparency about resolvability by making a public statement on the resolvability of each firm in scope of the draft PRA Rules, which statement may include identification of areas where further work is needed.

The PRA is proposing to introduce Rules that would require relevant firms to assess their preparations for resolution, including an analysis of how a firm understands it would be resolved, risks to its resolution and steps taken or arrangements made to remove or reduce the risks. Firms would be required to submit an assessment report to the PRA every two years, starting from September 2020, and to publicly disclose summaries of those reports every two years, starting from the end of May 2021.

The PRA states that it will be assessing other existing policies in the future to ensure that they align with the final Resolvability Assessment Framework. In particular, the PRA will consider changes to the Senior Managers and Certification Regimes and to its rules on operational continuity. In the meantime, firms are expected to comply with the existing requirements, including, from January 1, 2019, the incoming operational continuity rules.

View the BoE's consultation paper on its approach to assessing resolvability.

View the PRA consultation paper on resolution assessment and public disclosure by firms.

View the introduction to the consultation package.

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