Identifying and minimising risks, ensuring the continuation of systemically important functions and avoiding government bail-outs

The aims of recovery and resolution planning are to identify risks to the stability of the financial system due to systemically important financial institutions and to find viable ways to deal with the negative impact of a crisis. Maintaining systemically important functions is of central importance, as is avoiding government bail-outs. The bank’s recovery plan sets out the restructuring measures. The FINMA resolution plan outlines how a systemically important financial institution can be restructured and exit the market in an orderly fashion.

A recovery and resolution plan (RRP) covers a financial institution in its entirety. International financial institutions are governed according to the applicable local laws. The planning contributes in particular to the recognition and dismantling of obstacles to successful restructuring arising from cross-border activity. That is how the conditions are created to restructure international financial institutions or resolve them in an orderly manner without destroying value or interrupting systemically important functions.

As crises can escalate very quickly, the timing aspect plays a key role in recovery and resolution planning. Systemically important banks must make the required preparations to implement the planned measures promptly.