Financial Institutions Regulatory Compliance Newsletter

SRB's Strategic Rollout of the 2024 Resolution Planning Cycle

The Single Resolution Board (SRB) initiated the Resolution Planning Cycle (RPC) in April for the banks it oversees, with the adoption of over 100 resolution plans anticipated. This document updates stakeholders on the SRB's resolution planning activities and outlines the primary processes and stages of the ongoing RPC.

Resolution plans comprise the preferred resolution strategy, the minimum requirements for own funds and eligible liabilities (MREL), and the resolvability assessment. The SRB, in partnership with National Resolution Authorities (NRAs), crafts these plans and revises them yearly to reflect market shifts and internal changes within the banks, ensuring the availability of actionable plans for immediate deployment if necessary. Non-Banking Union countries participate as observers in the planning process.

For 2024, the SRB has established two universal priorities for all banks under its jurisdiction:

• To carry out the inaugural test of their ability to promptly provide high-quality valuation data, utilizing the SRB Valuation Data Set (known as the 2024 valuation testing).
• To execute a liquidity exercise as defined by the Internal Resolution Teams (IRTs), which includes reporting through the Joint SRB/ECB Liquidity Template. This exercise aims to bolster the banks' reporting of their liquidity status during and post-resolution, taking into account feedback from the SRB on the October 2023 exercise.

Specific clusters of banks with commonalities, such as a preferred resolution strategy, have targeted priorities including:

• Testing bail-in readiness via a dry run that assesses Management Information Systems (MIS) capabilities, internal execution, and communication, tailored to the bank's developmental stage.
• Evaluating separability.
• Planning for the solvent wind-down of trading activities.

The SRB communicated these objectives, along with individual bank priorities, through the SRB 2024 priority letters sent in September/October 2023.

In accordance with the Single Resolution Mechanism's (SRM) new Vision 2028 strategy, the SRB will place increased emphasis this year on assessing banks' resolvability and putting into practice the resolution strategies detailed in the resolution plans.

Dominique Laboureix, the SRB Chair, remarked in Brussels, "Resolution planning is about being prepared to address failing banks in an orderly manner, aiming to shield taxpayers and ensure the ongoing delivery of vital services to the economy while upholding financial stability. The Resolution Planning Cycle is a vital component in maintaining that stability."

The RPC synchronizes the resolution planning for banks under the SRB's purview into a consistent 12-month cycle that runs from April to March. Further information on the Planning Cycle for the year can be accessed here.