Case studies and practical examples list
Week 1: Foundations, Governance, and Stress Scenario Design
Introduction to RRP Philosophy
- Case Study: Recovery or Resolution?
- Assess a distressed bank’s position and distinguish between management-led recovery actions and the conditions that may lead to resolution.
Core Elements of a Recovery Plan
- Case Study: Building a Credible Recovery Plan.
- Develop the key components of a Recovery Plan for a mid-sized European bank, including governance, Critical Functions, Core Business Lines and escalation arrangements.
- Practical Example: Mapping Critical Functions and Core Business Lines
- Identify critical functions and core business lines and assess their interconnectedness with the wider banking group and financial system.
Governance Framework, Roles and Internal escalation procedures
- Discussion: Who Owns the Recovery Plan?
- Explore the roles of the Board, ALCO, senior management, Risk, Treasury and the Crisis Management Team in preparing for and responding to a financial crisis.
Stress Scenario Design
- Case Study: Designing a Severe but Plausible Stress Scenario
- Develop an idiosyncratic, systemic or combined stress scenario tailored to a bank’s risk profile and assess its implications for recovery planning.
Week 2: Early Warning Indicators and Recovery Measures (Capital & Liquidity)
Early Warning Indicators and Recovery Triggers
- Case Study: From Early Warning to Recovery Action
- Analyse a deteriorating bank’s capital, liquidity, market and business indicators and determine when management should escalate and activate recovery measures.
- Practical Example: Designing an EWI and Recovery Trigger Framework
- Construct a dashboard linking Early Warning Indicators, Recovery Triggers, escalation levels and management actions.
Capital Recovery Options
- Case Study: Choosing the Right Capital Recovery Options
- Compare capital recovery measures, including deleveraging, asset disposals, capital generation and restructuring options, under different market conditions.
Liquidity Recovery Options
- Case Study: Choosing the Right Liquidity Recovery Options
- Compare liquidity recovery measures, including asset disposals, Central Bank monetization facilities, and collateral management, under different market conditions.
Feasibility and Credibility Assessment of recovery options
- Practical Example: Quantifying Recovery Capacity
- Assess the financial impact, timing, execution constraints and market capacity of alternative recovery options.
- Discussion: How Much Recovery Capacity Is Enough?
- Debate the trade-off between maintaining credible recovery capacity and holding a realistic set of executable recovery options.
Week 3: Resolution Strategies and MREL Deep Dive
The Point of No Return
- Case Study: From FOLTF to Resolution
- Examine the transition from recovery to resolution and identify the key decisions and stakeholders involved at the point of non-viability.
Resolution Strategies and Tools
- Case Study: Aligning with Authority the Resolution Strategies
- Assess Bail-in, Sale of Business, Bridge Bank and Asset Separation options for a failing bank, evaluate their strategic and financial implications and demonstrate the authority resolvability of the bank in each strategy.
MREL and Resolution Funding
- Practical Example: Assessing MREL Capacity and Eligibility
- Analyse a bank’s liability structure and determine the availability and eligibility of MREL instruments, including subordination requirements.
- Case Study: Funding the Resolution Strategy
- Assess the balance-sheet impact and funding cost of building an MREL-eligible liability stack under different market conditions.
Multiple Point of Entry (MPE) / Single Point of Entry (SPE) strategies for banking groups.
- Practical Example: MPE vs SPE Resolution Strategy
- Compare Multiple Point of Entry and Single Point of Entry approaches for a cross-border banking group and assess their implications for capital, funding and loss allocation.
- Discussion: Justifying the Preferred Resolution Strategy to the Authority
- Explore the practical constraints that may determine whether a resolution strategy is feasible and executable in a real crisis. Navigate regulatory dialogue and demonstrate resolvability.
Week 4: The Resolution Weekend and Operational Continuity in Resolution (OCIR)
- Case Study: EU-subsidiary bank resolution process and outcome
- the Resolution Weekend: the step-by-step transition from Friday market close to Monday market open;
- communication to regulators, employees, depositors, counterparties, investors and the wider market;
- Operational Continuity after the Resolution Weekend and orderly wind-down of a bank.
