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Home > Prudential Regulation Authority > Recovery and resolution
 

Recovery and resolution

This page sets out the PRA's approach to recovery and resolution. Further information is available in the PRA's approach to banking supervision.

One of the key channels through which firms can adversely affect financial stability is through disorderly failure which disrupts access to critical economic functions. To mitigate this risk, the PRA aims for a position where the failure of any firm is orderly; that is, where the appropriate degree of continuity of access to a firm's critical economic functions is maintained in resolution such that disruption is contained, avoiding a risk to financial stability or a loss of confidence in the financial system.

Bank Recovery and Resolution Directive

The PRA has built on its approach to recovery and resolution planning through the European Union (EU) Bank Recovery and Resolution Directive (2014/59/EU) (BRRD).

The BRRD provides authorities with a common set of tools and powers for dealing with failing banks, and requires banks to facilitate this process by providing information for recovery and resolution planning purposes as well as meeting resolvability requirements.

In June 2014, the BRRD was finalised and published in the Official Journal of the EU, creating a harmonised framework across Europe for dealing with the problem of ‘too big to fail’ through bank recovery and resolution.

The BRRD contains provisions relating to recovery and resolution planning, intragroup financial support, early intervention, resolution tools and powers, cross-border group resolution, relations with third countries and financing arrangements.

BRRD forms part of larger reforms under the Bank of England’s wider resolution and resilience agenda.

Implementing BRRD

On 16 January 2015, the PRA published final policy, detailing its final approach to implementing the BRRD. The rules contained in the final policy require the industry to be better prepared for future financial stress through credible and robust recovery and resolution planning. The rules help the Bank of England in its role as the resolution authority by requiring firms to provide key data to be used in resolution plans which will set out how the firm will be resolved in an orderly manner without causing systemic disruption. See 'Supervisory tools: Recovery and resolution plans – PS1/15, SS18/13 and SS19/13' for further details on the implementation of the BRRD.

Readers may also find it helpful to refer to the Bank’s approach to resolution. 

See also:

PRA publications

Readers can also find more information on recovery and resolution in the PRA Publications section of the website – see Related links. Select Banking policy publications, and click on the ‘Topic’ drop down and select ‘Recovery and resolvability’.