A core aspect of the Prudential Regulation Authority’s (PRA) approach is that it will ensure preparedness for either recovery or resolution of a failing firm. This PRA policy statement contains final rules on recovery and resolution planning and is accompanied by two supervisory statements. Together these documents set out the PRA’s recovery and resolution planning framework.
The rules and supervisory statements are relevant to holding companies, mixed financial holding companies, mixed activity financial holding companies, banks, building societies, and PRA-designated investment firms.
The rules and supervisory statements take effect from 19 January 2015, except for the rules to require a contractual clause recognising bail-in powers in liabilities governed by the law of a third country. These rules will be phased in starting with the first phase, which applies to debt instruments, commencing on 19 February 2015. The second phase, which applies to all other relevant liabilities will commence on 1 January 2016, as set out in the final rules.
This policy statement (PS) sets out the final PRA rules on implementing the Bank Recovery and Resolution Directive (BRRD), updates two related supervisory statements and responds to feedback received by the PRA to its proposals in CP13/14 (CP).
- require the industry to be better prepared for future financial stress through credible and robust recovery planning,
- help the Bank of England in its role as the resolution authority by requiring firms to provide information to be used in resolution plans, and
- ensure the feasibility of bailing-in creditors, in the case of cross border firms, by requiring the contractual recognition of bail-in.
The rules will require banks, building societies and PRA-regulated investment firms to produce recovery plans (identification of options to recover financial strength in stress situations) and resolution packs (information to support resolution planning by the authorities).
Update 16 January 2015
PS1/15 replaces PS8/13 (published on 19 December 2013). PS8/13 is available in Related Links.
Recovery Planning Supervisory Statement
This supervisory statement sets out the PRA's expectations for firms’ recovery plans.
Recovery planning - SS18/13
This supervisory statement was updated on 16 January 2015 to include the PRA's expectations on scenario testing and the wind-down analysis. SS18/13 as published on 19 December 2013 is available in Related Links.
Resolution Planning Supervisory Statement
This supervisory statement sets out the PRA's expectations for the information that firms should provide to the regulator to aid resolution planning.
This supervisory statement was updated on 16 January 2015 to reflect that it now applies to firms and holding companies. SS19/13 published on 19 December 2013 is available in Related Links.