BoE and PRA updated the resolution policy for banks in UK, following a package of proposals issued in October 2020. The package of proposals included a BoE consultation paper on updates to its approach to assessing resolvability (Resolvability Assessment Framework), the PRA consultation paper on amendments to the reporting and disclosure dates of resolution assessments (CP19/20), and the PRA proposal on updates to the policy on operational continuity in resolution, also known as OCIR (CP20/20). PRA has now published policy statements (PS9/21 and PS10/21) that contain responses to CP20/20 and CP19/20 and the final policy with respect to the operational continuity in resolution and the amendments to reporting and disclosure dates of resolution assessment. Additionally, BoE has published the updated Statements of Policy on the Resolvability Assessment Framework.
PS9/21:The PRA policy statement on operational continuity in resolution contains amendments to the Operational Continuity Part of the PRA Rulebook (Appendix 1) and a new supervisory statement (SS4/21) on ensuring operational continuity in resolution, which will supersede SS9/16 (Appendix 2). The amended Operational Continuity Part and SS4/21 both will be effective from January 01, 2023, until which time SS9/16 will remain in place.
PS10/21:The PRA policy statement on amendments to reporting and disclosure dates contains amendments to Rules 3.1(1) and 4.1(1) in the Resolution Assessment Part of the PRA Rulebook (Appendix 1) and an updated SS4/19 on resolution assessment and public disclosure by firms (Appendix 2). The amendments to Resolution Assessment 3.1(1) and 4.1(1) will be effective from June 02, 2021. The amendments to SS4/19 took effect on publication of PS10/21 on May 28, 2021. Firms must submit their first report by October 01, 2021. Thereafter, firms must submit their report biennially by the first Friday in October of the relevant calendar year. As part of the preparations for implementing the revised operational continuity in resolution policy, firms should submit to PRA their plan for implementing the policy by February 18, 2022. Firms are encouraged to submit this plan, along with any other updates they may have to their reports, as they progress their implementation of capabilities ahead of the compliance deadline of January 01, 2022 of the Statement of Policy on Resolvability Assessment Framework. Firms must publish their first public disclosure by June 10, 2022. Thereafter, firms must publish their public disclosure biennially by the second Friday in June of the relevant calendar year.
Statement of Policy: The BoE Statement of Policy on Resolvability Assessment Framework sets out how BoE, as the designated resolution authority, intends to assess the resolvability of individual firms and the resolvability outcomes it deems necessary to support resolution. BoE has updated the Operational Continuity in Resolution section of the Statement of Policy as well as the sections where firms’ submissions and disclosures under the Resolution Assessment Part of the PRA Rulebook in 2020/21 were mentioned. In light of the final OCIR policy of PRA, BoE also clarified the following:
- Remove references to the term “essential services” from the Statement of Policy on approach to assessing resolvability as well as Statement of Policy on management, governance, and communication; this is to reflect the PRA decision in final policy not to introduce the term “essential services,” but instead to amend the definition of critical services in the Operational Continuity Part of the PRA Rulebook to refer to both critical functions and core business lines.
- The BoE assessment of the resolvability of firms during 2021 and 2022 will focus on the PRA Operational Continuity in Resolution policy that came into force on January 01, 2019, taking into account the January 01, 2023 effective date for the revised Operational Continuity in Resolution policy of PRA. This will also be reflected in the public statements of BoE regarding the resolvability of the major UK firms.
Effective Date: January 01, 2023 (SS4/21), June 02, 2021 (PRA Rulebook), May 28, 2021 (SS4/19)
Keywords: Europe, UK, Banking, Resolution Framework, Operational Continuity, PRA Rulebook, Governance, Resolvability Assessment, Statement of Policy, Reporting, Disclosures, PRA, BoE
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