Resolution planning for credit institutions in Spain and in the euro area

Abstract

This article presents the planning process for the resolution of Spanish credit institutions. In particular, it sets out the content of the resolution plans prepared by the Banco de España since 2015, in its capacity as the national preventive resolution authority under the European Union’s regulatory framework. The Banco de España participates actively, whether exclusively or in collaboration with the Single Resolution Board (SRB) and with other resolution authorities belonging to the Single Resolution Mechanism (SRM), in resolution planning for 79 credit institutions. Resolution planning is an essential component of the Banking Union framework, providing for the actions required in the event that credit institutions should need to be resolved. The authors explain in some detail the key components of resolution plans. In particular, they offer a detailed analysis of banks’ business models and other key aspects such as the resolution strategies and tools to be applied in each case, the identification of obstacles to executing these strategies and tools, and the adoption of the measures needed to remove or minimise such obstacles. Resolution planning does not seek to anticipate when and how future bank crises will arise, nor to estimate the probability of a crisis at specific financial institutions. The main aim of such planning is to have action plans in place for immediate and coordinated action if the time comes for a bank’s obligatory resolution. In that way, the adverse effects on financial and economic stability are minimised.