Key parts of the Resolvability Assessment Framework
Update 10 June 2022: The Bank published the findings from its first assessment of the resolvability of the major eight UK firms as part of the Resolvability Assessment Framework. In parallel, the major eight UK firms also published their own public disclosures on their preparations for resolution.
Update 28 May 2021: The Bank and PRA published updates to OCIR policy and the RAF:
We have also published a new webpage listing the main policy documents related to the Resolvability Assessment Framework.
Update 18 December 2020: The Bank announced changes to the resolvability deadlines under the RAF for mid-tier banks. The deadline for mid-tier banks to implement the Statement of Policy ‘The Bank of England’s Approach to Assessing Resolvability’ and to achieve the three resolvability outcomes has been extended from 1 January 2022 to 1 January 2023.
This update accompanied changes to deadlines for certain firms to meet their Minimum Requirement for Own Funds and Eligible Liabilities (MREL).
Update 7 May 2020:
On 7 May 2020 the Bank, as Resolution Authority, and PRA announced measures to alleviate operational burdens on firms in response to the Covid-19 outbreak. Among these measures, it was announced that the PRA has offered firms, via a temporary modification by consent, a one year delay to the first reporting and disclosure dates for firms in scope of the Resolution Assessment Part of the PRA Rulebook.
These firms will now be required to first submit a report of their assessment of their preparations for resolution to the PRA by October 2021 and to publish a summary of this report by June 2022. The Bank intends to make its first public statement on these firms’ resolvability by June 2022. As noted in the announcement, the PRA intends to consult in due course, principally with a view to aligning the dates in the Resolution Assessment Part of the PRA Rulebook with those in the modification by consent.
By holding firms accountable to regulators, the public and their investors, the RAF helps to ensure that firms would be able to fail in an orderly fashion without causing excessive disruption to the UK financial system.
The RAF has three main components:
- How the Bank, as the UK’s resolution authority, will assess resolvability, building on work firms and the Bank have already done. The statement of policy, The Bank of England’s approach to assessing resolvability, outlines the outcomes the Bank is looking for from firms to support resolution. Firms will use existing Bank and PRA policies, as well as new policies published alongside the RAF, to understand the objectives and principles they should meet.
- A new Resolution Assessment Part of the PRA Rulebook that requires major UK firms (retail deposits greater than £50 billion) to assess their preparations for resolution, which must include the identification of any risks to successful resolution and plans in place to address those risks. Relevant firms must submit a report of that assessment, and publish a summary of their most recent report (public disclosure). The PRA Supervisory Statement SS4/19 Resolution assessment and public disclosure by firms sets out what the PRA expects these firms to do. It also highlights that senior management should be accountable for this work within firms.
- The Bank’s intention to publish information on the resolvability of each major UK firm and where we believe there is more work for them to do.