One area where a barrier to resolvability may arise is where the Bank is unable to obtain sufficiently timely and robust valuations to support the effective use of resolution tools. Timely and robust valuations are critical to ensuring that resolution action is sufficient to address the full extent of losses, that creditors are treated fairly through resolution, and that risks to public funds are minimised.
The Bank has released its final Statement of Policy on valuation capabilities to support resolvability. The policy statement also discusses responses to the consultation paper published in August 2017. The policy includes principles for the data, information, models, governance, documentation, and assurance firms will need to have in place to support timely and robust resolution valuations. The deadline for compliance with the policy is 1 January 2021.
Update 19 November 2018
The Bank (as the UK’s resolution authority), sent a letter to CFOs of relevant firms regarding the Bank’s policy on valuation capabilities to support resolvability, published in June 2018.
The purpose of these letters is twofold. First, they provide illustrative and non-binding guidance to support firms’ implementation of the Bank’s policy. Second, they ask for firms to complete an informal survey on how they intend to comply with the policy. The policy comes into effect on 1 January 2021.