Financial reform: what banks should consider when developing recovery and resolution plans
Since the financial crisis, legislative and regulatory authorities have been developing systems and controls to reduce the need for bank bailouts. New regulatory standards are being put in place to make all financial institutions, especially banks, more robust and reduce the risk of failure in the future.
The authorities are considering measures to help banks and financial institutions be restored to health – or allowed to fail – and thereby, resolved in a manner that does not require taxpayer support or impact financial stability.
A key component of this new regulation is the requirement for the major banks to prepare and implement Living wills/Recovery and Resolution Plans (RRPs) by the end of 2012. The Group of Twenty requires regulators and the largest global financial institutions to ensure these plans outline how firms would regain viability if they are under severe financial pressure and the steps the local regulators will take if, despite these steps, the institutions fail.
Living wills/RRPs require significant commitment. They can be extensive and complex, addressing all of the business implications and operational changes that may need to be made to deliver effective, realistic and pragmatic plans.
Learn more information about Living wills/Recovery and Resolution Planning and the steps institutions need to take to develop a comprehensive plan.
Banks must think in terms of legal entities -- not simply lines of business -- when crafting living wills.
Recovery and resolution is an evolving process. Read about management's challenges, and learn how different jurisdictions are responding.
The ICB Report will have far-reaching implications for the UK financial services sector. What does this mean for your bank?
EY leaders discuss the complexity of risk and regulatory issues facing banks today -- and beyond -- in this Financial Times supplement.
Read about five things banks should consider when developing "living wills," one of the most noteworthy requirements of the Dodd-Frank Act.