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A strategy for handling a financial institution's failure in an orderly way.
Planning requires more than a promise to sell assets. Authorities need to know which legal entities own assets, where funding comes from, how services such as payments depend on technology and staff, and what could obstruct an orderly process. In the United States, certain large firms submit plans addressing orderly resolution under bankruptcy. Requirements and available legal tools vary across jurisdictions.
Imagine a group whose payment service depends on a technology company within the same group. If the bank enters insolvency and that service company loses funding, payments could stop even if a buyer wants to acquire the viable banking operation. A useful plan identifies that dependency and considers how access, staffing and funding could continue during the transition.
Fed and FDIC find no deficiencies in large-bank resolution plans