The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups. These are the good practices that have helped crisis management groups to enhance preparedness for the management and resolution of a cross-border financial crisis affecting a global systemically important bank (G-SIB). While many of these practices have been well-established, others are emerging or developing. The good practices identified in the report relate to the structure and operation of crisis management groups, resolution policy, strategy, and resolvability assessments; coordination on enhancing the resolvability of a firm; and enhancing home-host coordination arrangements for crisis preparedness.
The crisis management groups bring together the home and key host authorities that have a role in the resolution of a systemically important financial institution. The report provides a reference for home and host authorities in crisis management groups to help them enhance their crisis management preparedness. It draws on a 2020 stock-take exercise on how G-SIB home and host authorities use and operate crisis management groups as well as on the experience of members of crisis management groups during the COVID-19 pandemic. The focus is on activities of crisis management groups that seek to enhance crisis preparedness rather than on cooperation during a crisis. The good practices identified in this report are organized along 16 desired outcomes that crisis management groups seek to achieve, including the following:
- The structure and operation of crisis management groups. Crisis management group membership and structures reflect the specificities of the firm, its business model, and geographic footprint. The crisis management group is underpinned by an institution-specific cooperation agreement that facilitates the necessary crisis management planning, and cooperation, between the relevant authorities.
- Resolution policy, strategy, and resolvability assessments. The members of a crisis management group are kept informed of firm-specific and regulatory resolution planning related developments in relevant home and host jurisdictions. The members also review the resolution strategy and operational resolution plan annually or when there are material changes to a firm’s business or structure. The crisis management group serves as a forum for coordinating resolvability assessments, sharing findings, discussing any remaining barriers to resolvability, and plans to removing these barriers. The crisis management group also serves as a forum for the firm to present its progress on resolvability and for the members to ask questions to facilitate their review and monitoring.
- Coordination on enhancing the resolvability of a firm. The members of crisis management group review a firm’s capabilities to support resolution, with a view to obtaining comfort over their operationalization and reliability at the group and local levels. The members also have a clear understanding of the needed data to inform the decisions of authorities in a crisis and in resolution. Additionally, the members coordinate expectations for, and feedback to, the firm on its resolution capabilities and progress toward resolvability.
- Enhancement of home-host coordination arrangements for crisis preparedness. The members have a clear understanding of each other's internal decision-making and execution processes. Also, the members and their representatives maintain strong working relationships to support effective coordination in a crisis. Communications between representatives beyond formal meetings, such as bilateral meetings, workshops, or calls, have helped to strengthen interpersonal relationships.
As crisis management groups continue to evolve in performing their activities, FSB will continue to monitor the development of their practices and consider any future work to promote consistency and effective operation of crisis management groups.
Keywords: International, Banking, Insurance, Crisis Management, G-SIB, Good Practices, Resolution Framework, Resolvability Assessment, Operational Risk, Governance, FSB
Previous ArticleOSFI Updates Timeline for Implementation of Certain Basel Rules
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
The Australian Prudential Regulation Authority (APRA) granted license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.
EU published, in the Official Journal of the European Union, a corrigendum to the Delegated Regulation 2015/35, which supplements Solvency II Directive (2009/138/EC).
The European Banking Authority (EBA) published an Opinion on the scale and impact of de-risking in European Union and the steps that competent authorities should take to tackle unwarranted de-risking.
The French Financial Markets Authority (AMF) published its 2022 work priorities, along with the supervisory priorities for 2022.
The U.S. Department of the Treasury issued a determination on a request for an exemption, by RBC US Group Holdings LLC, from certain requirements of the rule implementing the qualified financial contracts (QFC) recordkeeping requirements under the Dodd-Frank Act.
The Financial Conduct Authority (FCA) announced that publication of 24 LIBOR settings has ended and that, going forward, the 6 most widely used sterling and Japanese yen settings will be published using a changed methodology.
The People’s Bank of China (PBC) formulated the recently issued Fintech Development Plan (2022 to 2025) under the Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives through the Year 2035.