The BRRD has also importantly changed how we supervise banks. Resolution authorities have the primary responsibility for resolution planning and execution. Nonetheless, supervisors should be actively considering the resolvability of a firm, alongside financial resources (for example, supervisors review institutions’ internal capital and liquidity adequacy assessment processes), business model sustainability and governance, culture and risk management.
Ultimately, whether a firm can be resolved should be reflected in our supervisory risk appetite. The supervisor is consulted on resolution plans, prepared by resolution authorities, which gives us a deeper knowledge on legal structure, critical functions, internal and external interdependencies (i.e. essential services etc), IT systems, access to financial market infrastructures, preferred resolution strategies, and separability to name just some of the contents.