The Resolvability Assessment Framework (RAF) is designed to make resolution more transparent, better understood, and more successful. It builds on the work done since the financial crisis, ensuring that firms are, and are able to demonstrate that they are, resolvable.
The RAF has three main components:
- how the Bank of England (Bank), as resolution authority, will assess resolvability, building on work that both firms and the Bank have already done. The Bank’s Statement of Policy The Bank of England’s Approach to Assessing Resolvability, outlines the outcomes it considers necessary to support resolution. These outcomes are supported by existing policies as well as new statements of policy that set out the objectives and principles that firms should meet in order to avoid a determination that they have insufficient capabilities and arrangements to remove identified barriers to resolvability;
- A new Resolution Assessment Part of the PRA Rulebook which requires the major UK firms to perform an assessment of their preparations for resolution, which requires relevant firms to identify any risks to successful resolution and the plans in place to address them, submit a report of that assessment, and publish a summary of their most recent report (public disclosure). The PRA Supervisory Statement SS14/19 Resolution assessment and public disclosure by firms sets out the PRA’s expectations on how firms should comply with the new Part of the PRA Rulebook and sets out the PRA’s expectations regarding the importance of senior management accountability within firms; and
- the Bank’s intention to make a public statement concerning the resolvability of each of the major UK firms. In so doing, the Bank would identify any shortcomings where it believes there is more work to do.
The Bank of England’s Approach to Assessing Resolvability Statement of Policy applies to firms where:
- the Bank, as home resolution authority, has notified them that their preferred resolution strategy is bail-in or partial-transfer; or
- the Bank has notified them as host resolution authority, that they are a ‘material subsidiary’ of an overseas-based banking group for the purposes of setting internal MREL.
The Resolution Assessment Part of the PRA Rulebook applies to UK banks and building societies with retail deposits equal to or greater than £50 billion on an individual or consolidated basis, as at the date of their most recent annual accounts.
All Bank RAF policy is included within the Policy Statement ‘The Bank of England’s approach to assessing resolvability’. A split version of the policy statement, including each individual statement of policy contained within it, is available below to be helpful to readers.
Also available below are links to the PRA Policy Statement and Supervisory Statement ‘Resolution assessment and public disclosure by firms’.