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For certain banks, the size and complexity of their trading books could impede the credible and feasible implementation of their resolution strategies. Solvent wind-down is an approach that can be used for exiting trading activities in an orderly manner and avoiding posing risks to financial stability. The lack of a credible SWD plan could jeopardise the credibility and feasibility of the resolution strategy of any bank with material trading books.
The guidance was developed following work at Financial Stability Board level, surveys, a pilot exercise and consultation with G-SIBs. It applies to all banks with material trading books.
“Today’s document is about putting meat on the bones of existing SRB principles, giving more detail to banks on how to demonstrate resolvability in relation to structure, complexity and interdependencies of their trading books. It is yet another small, but important step on the road to resolvability.” – Elke König, SRB Chair.
Today’s guidance sets out the scope and minimum expectations for SWD planning and potential execution, with the main objectives to:
The application of this SWD guidance is specific to each bank and it may be adapted to individual situations in a proportionate manner.