Recovery Planning
Developing and integrating recovery plans in financial institutions
Introduction
Si nce Ja nua ry 2016, Bri ti s h credi t i ns ti tuti ons a nd
i nvestment firms with a n initial ca pi ta l re qui rem ent o f
€730,000 ha ve been requi red by the FCA to crea te a nd
ma i ntain recovery plans.
Recovery planning is a regulatory i nstrument desi g ned to
ens ure fi nancial i nstitutions’ ability to s urvi ve f i na n ci a l
di s tress without needing extraordinary public support. The
FCA’s requirements for recovery p l a ns d eri ve f ro m th e
Europea n Counci l ’s Ba nk Recovery a nd Res ol uti on
Di rective (BRRD).
Fi ntegra l ha s extens i ve experi ence of crea ti ng a nd
developing recovery pl ans.
Assessment of firm’s recovery capacity
Recovery ca pacity ca ptures the institution’s overall a bi l ity
to i mprove its position i n the event of a s ignificant crisis. I t
i s compos ed of the a ggrega ted i mpa ct of a l l recovery
opti ons available in a particular crisis scenario.
Preparatory Measures
Thes e should facilitate the i mplementation of the recovery
pl a n a nd remove obstacles to the use of recovery options .
Identifying a nd gra dually removing obstacles i ncreases th e
i ns titution’s ability to cope with future cri ses.
Success factors
Contents of recovery plans
From our experience we have i dentified the followin g k e y
el ements of a s uccessful recovery planning project:
The FCA s ti pulates that recovery plans need to contain th e
fol l owing:

Us e exi s ti ng procedures a nd ri s k ma na gement
i ns truments ra ther than creating a “parallel universe”
Summary

Invol ve experts from the institution’s business units
An executive summary of the key elements of the recovery
pl a n, a n assessment of the institution’s recovery ca pa ci ty
a nd a n overview of material changes to the most rece ntl y
fi l ed recovery plan.

Focus on recovery opti ons a nd s cena ri os ; they a re
cri ti cal for the recovery plan

Logi cally connect the elements of the recovery plan to
crea te a coherent s toryline

Seek early feedback from the competent authorities

Cl os ely monitor changes i n the regulatory framework
Description of legal and financial structures
Thi s section describes the l egal and financial structures o f
the entity/entities within the s cope of the recove ry p l a n.
The i ns ti tuti on ha s to i denti fy i ts core (s i gni fi ca ntl y
contri buti ng to profi t, fundi ng or ri s k , a mong others )
bus iness lines as well as cri tical (for the financi a l s ys tem )
functi ons a nd map those to the legal entities.
Information
framework
on governance and risk
management
The description of the firm’s governa n ce a rra ng em ents
i ncl udes a n overvi ew of its ri sk management f ra m ework ,
the process of implementing and updati ng th e re cove ry
pl a n, the communication a nd disclosure process as well a s
the procedure for i mplementing the plan i n the event o f a
s i gnificant financial deterioration.
Recovery Indicators
Recovery i ndi ca tors a re qua l i ta ti ve a nd qua nti ta ti ve
i ndicators which relate to the fi rm’s financial position. Th e
i ns titution has to set tri ggers i n a w a y th a t a l l ows i t to
i dentify a possible cri sis i n a ti mel y m a nner a nd l a unch
i nternal escalation procedures.
Our Services
We offer a full range of s ervices:

Recovery pl a n quick check: a n a na l ys i s of your
i ns titution’s readiness to create a recovery plan

Ini tial drawing up of the recovery p l a n a ccordi n g to
FCA requirements

Integration of recovery pl a nni ng i nto corpora te
governa nce and risk management processes

Annual a nd a d hoc updates of the recovery plan
Selected Credentials
Our expertise is underpinned by a comprehensive p roject
portfolio in the fi eld of recovery planning:

Mul ti ple i nitial setups a nd s ubs eq uent u p da tes o f
recovery pl ans since 2013

Severa l Top-10 German banks among our clients

Experi ence of a diverse range of size, business mo del s
a nd governance structures

Proven methodology a nd s tandardised templates th a t
a re a pproved by regulatory a uthorities
Recovery options
Recovery opti ons a re mea s ures a nd a rra ngements
i ntended to i mprove the fi rm’s ca pi ta l a nd l i qui di ty
s i tuation and secure the long-term vi ability of i ts bus i nes s
model. Their feasibility a nd effect h a ve to b e a na l ys ed
a cros s a ra nge of s evere cri sis s cenari os rel eva nt to th e
fi rm’s environment.
Contact
Marc Daferner Tel : +49 (0) 160 583 42 53
Ema il: ma [email protected]