Tackling too-big-to-fail

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Tackling too-big-to-fail

The resolvability challenge for banks

Making banks resolvable is a key part of the global response to tackle institutions deemed ‘too-big-to-fail’. As banks and resolution authorities turn in earnest to tackling impediments to resolvability, however, the complexity and magnitude of the challenge are becoming apparent.

While regulators in the US and Europe are undoubtedly more advanced in their approach to resolvability than Asian regulators, the focus on issues relating to systemically important banks is becoming increasingly relevant in the region. As a result we expect the regulatory framework across Asia to gradually converge towards the direction taken in these more mature markets.

The paper sets out our view on what “good” looks like for banks trying to achieve resolvability, identifying six ‘resolvability drivers’ that they must address to meet resolution authorities’ expectations:

  • Simplifying legal entity structures
  • Reducing operational complexity
  • Enhancing the credibility of loss-absorbing capacity
  • Improving liquidity management
  • Rationalising and justifying global booking models
  • Enhancing data quality, reporting and valuation capabilities

For banks in Asia Pacific, the paper provides a strong framework for assessing business implications and explains how resolvability work can be leveraged as an opportunity to strategically transform businesses to become more efficient and competitive.

Tackling too-big-to-fail

The Deloitte Centre for Regulatory Strategy is a source of critical insights and advice, designed to assist the world’s largest financial institutions manage the strategic and aggregate impact of regional and international regulatory policy.

With regional hubs in the Americas, Asia Pacific and EMEA, the Centre combines the strength of Deloitte’s network of experienced risk, regulatory, and industry professionals — including a deep roster of former regulators, industry specialists, and business advisers — with a rich understanding of the impact of regulations on business models and strategy.

Click here for more information on the Deloitte Asia Pacific Centre for Regulatory Strategy.

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