On August 31, 2018, the Prudential Regulation Authority issued an update on the application of its supervisory statement, "Resolution Planning." The supervisory statement sets out the PRA's expectations on the resolution planning information that firms must submit to comply with their obligations under the EU Bank Recovery and Resolution Directive. The update confirms the approach that will be taken by the PRA and the Bank of England as the U.K.'s national resolution authority.
Following a consultation launched in October 2017, in April 2018, the European Banking Authority submitted final draft revised Implementing Technical Standards under the BRRD to the European Commission. The revised ITS set out procedures and a minimum set of standard templates for use by institutions when providing resolution planning information to resolution authorities. The ITS stipulate that the new framework will take effect in 2019 when resolution authorities collect information as of December 31, 2018. Firms are expected to start reporting using the new templates by the end of May 2019 at the latest and should submit templates on an annual basis in accordance with the ITS. However, the update confirms that the PRA has decided to delay resolution pack phase 1 submissions until 2020 (or later as required by firms' supervisors) while it assesses the impact of the ITS on the expectations in its supervisory statement.
The BoE, as the U.K.'s national resolution authority for the purposes of the BRRD, is permitted to set alternative requirements for firms that are subject to "Simplified Obligations" as defined in Regulatory Technical Standards that are expected to come into force later in 2018. The update confirms that the BoE anticipates that all U.K.-headquartered firms and all subsidiaries of third-country groups that have been notified that their preferred resolution strategy does not involve the use of stabilisation powers will be subject to Simplified Obligations. Such firms will not need to submit information using the templates in the ITS unless the Bank informs them otherwise. Instead, firms subject to Simplified Obligations should submit Phase 1 resolution planning data in accordance with the PRA's supervisory statement.
The update confirms that firms should expect to be contacted by their supervisory contact by September 6, 2018 if they are affected.
The update is available at: https://www.bankofengland.co.uk/prudential-regulation/publication/2013/resolution-planning-ss, the current version of Supervisory Statement, "Resolution Planning" (SS19/13) is available at: https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2015/ss1913-update.pdf, details of the final draft revised ITS are available at: https://finreg.shearman.com/european-authority-proposes-revised-techn and details of the final draft RTS on Simplified Obligations are available at: https://finreg.shearman.com/european-banking-authority-publishes-regulatory-t.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
