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Living wills

Recovery and resolution plans

Recovery & Resolution Plans (RRPs) or “Living Wills” have been proposed by international regulatory and political bodies including the G20 and the Financial Stability Board as part of the wider set of reforms to make the financial system safer.  National regulators and policy makers have begun to produce detailed rules and guidance about what these should look like. In addition to Systemically Important Financial Institutions (SIFIs) around the world, living wills will also very soon be a requirement for a number of financial institutions in the UK, including all deposit takers.

There are two primary components to a living will:

  • Recovery plan - A plan to prolong the ability of a firm to continue in operation through a period of crisis or stress (market wide or firm specific).  The actions considered in the recovery plan could include business or asset disposals, reductions in the risk profile of the business or restructuring of liabilities.  Actions should be material enough to have an impact on the capital or liquidity (or both) position of the firm.  The recovery plan is owned by management.

  • Resolution plan - A plan for the orderly resolution of the firm by the relevant resolution authority in the event a firm fails.  The resolution plan will be devised and executed by the relevant authorities with a significant amount of analysis required by firms to facilitate planning by the authorities. Resolution planning will seek to avoid impacts on financial stability and maintain provision of critically important functions to the economy without exposing taxpayers to loss.

Crucial to the development of both these plans is a clear understanding of the structure of the group and of the interdependencies which exist in this structure.

All financial institutions will need to be able to clearly articulate the structure of their legal entities, business lines and supporting infrastructure and demonstrate a clear understanding of the impact that these structures have on both recovery and resolution. The Prudential Regulation Authority document Our approach to banking regulation (PDF) published in May 2011 notes that “resolvability” is a key element of UK prudential regulation and in particular in considering the appropriateness of firm structures.     

Whilst putting together a living will is likely to be a significant body of work for all but the simplest of institutions, there are potential advantages which can be obtained from the process.  As the concept continues to develop on a national and international level, firms need to be mindful of the business opportunities that will arise from increased transparency and better management information.

Recovery & resolution plans are central to the global regulatory response to the financial crisis led by the G20 and the Financial Stability Board.  Deloitte has been active in this area since late 2009 working with banks and regulators nationally and internationally addressing the requirements for living wills.

Living wills research and insight

  • Rolling out resolution and recovery plan
    This global paper examines the elements that should be included in a recovery and resolution plan, and provides insight on some common questions, such as defining trigger events for the plan, and how frequently the plan should be updated.
  • Planning for bank recovery and resolution
    Following a discussion paper issued by the FSA in October 2009, the concept of Living Wills has been much talked about in the UK. This Deloitte point of view document has been issued shortly afterwards and considers some of the issues that banks are likely to face in addressing the proposals in order to assist management in preparing their plans.

Useful links

  • Meet the Financial Services team
  • In the press
  • Research & publications
  • Submit a request for proposal
  • Contact us


  • Recovery and resolution for non-banks
    Building a safer financial system.
  • The Banking Regulation Webinar
    From Basel III to Living Wills: examining the impact of new regulatory requirements.

Find out more

  • Financial Stability Board
  • Basel Committee on Banking Supervision
  • Prudential Regulation Authority
  • European Commission
  • Federal Deposit Insurance Corporation

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