Planning to Ensure an Effective Resolution by PIDM

“In preparing for battle I have always found that plans are not always useful, but planning is indispensable” ~ Dwight Eisenhower
   

What is resolution planning?

• Resolution planning is an advanced planning tool that enables PIDM to work with member institutions during peacetime to develop a customised resolution plan that is feasible and credible to ensure the necessary readiness is in place should a resolution be needed.
• Resolution planning entails, amongst others:

1. determining the member institution’s critical functions, core business lines, extent of inter and intragroup dependencies, etc.
2. identifying in advance suitable resolution options
3. identifying and addressing impediments to resolution
4. building capabilities to execute a resolution

• The key outcome of the resolution planning process is a made-to-measure resolution plan that is customised based on the specificities of the member institution’s size, complexities, business profiles and operational structures, etc.
• Resolution is likely to be complex to execute and impossible to predict how it will unfold, therefore planning for resolution well ahead of any stress emerging is important to prepare us for the worst, so we are ready to act if needed.

Read more information on the Resolution Planning in this article.
  

Who is involved in resolution planning?

• While PIDM is responsible for planning and executing a resolution, the involvement of BNM and member institutions is vital.
• The co-ordination and co-operation between PIDM, BNM and member institutions contribute to the effective implementation of recovery and resolution planning ("RRP").
• Member institutions have the most in-depth knowledge of their own business and operations. As such, they are expected to play a more involved role in the recovery and resolution planning process to ensure a more robust outcome.
• For recovery planning, member institutions are responsible to develop their own recovery plan and submit to BNM setting out, amongst others, the recovery options that the member institution can implement during severe stress situation to restore itself to long-term viability and return to business-as-usual.
• For resolution planning, besides providing support and input to PIDM, member institutions are also expected to carry out the relevant assessments and undertake institution-specific measures to improve its resolvability. This may include developing the required financial and operational capabilities to support the implementation of a resolution plan. Correspondingly, PIDM, in consultation with BNM, will undertake the relevant measures to address industry-wide impediments to resolution.

 

The Recovery and Resolution Planning (RRP) policies and guidelines

• In July 2021, BNM has issued the Policy Document on Recovery Planning, requiring financial institutions to submit recovery plans within 18 months.

• PIDM will roll out Resolution Planning Guidelines in 2023, following the completion of an industry consultation in 2022. [Click here for RSP Exposure Draft]