Deloitte comments on Bank of England resolvability assessment

Commenting on today’s disclosures from the Bank of England, Alistair Morley, Deloitte’s lead partner on resolution, said:

“Since the last public disclosures in 2022, the industry has shown that it has made further progress. Real life events have demonstrated the need for banks and building societies to be resolved in a timely and robust manner to ensure the stability and continuity of the whole financial system.

“However, as the Bank of England has indicated, there is still work to be done. The largest and most complex firms remain just that, and we expect a renewed focus and appetite for continued work to enhance the resilience of them. This will ensure that any banking or building society failure is dealt with in an orderly manner to mitigate the risks to the public and wider financial system.

“Giving an additional year until the third resolvability assessment – proposed for 2026-7 – recognises the progress made. This gives more time for the banks and Bank of England to focus on making the enhancements and the remediation needed, as well as the testing and assurance processes firms should be undertaking. This seems like a sensible balance given the time and energy dedicated to the assessment process.

“Firms will be expected to demonstrate that they can identify and execute a restructuring strategy to address the cause of any distress. As today’s disclosures show, firms need to continue to build on the good work to date to ensure that resolvability is as robust as possible.”