Resolution Management Resolution Management

Efficient Methodology

We support institutions whose existence is in jeopardy at all stages of the resolution process, from the preliminary phase of a crisis situation to the consistent and timely implementation of complex measures based on a jointly developed, optimal strategy. This strategy aims at forming viable entities and dismantling those divisions/units which have proved to be unviable. Throughout the entire period Resolution Management makes use of a dependable and transparent method for dealing with a crisis, with a clear focus on the successful minimisation of capital losses.

Dealing with a Crisis in Five Steps

The development and overcoming of existential crises at financial institutions can be broken down into five interrelated phases, which serve as a time axis for our overall approach. In the preliminary phase problems become apparent, which – without a solution in the short term – lead to an escalation of the situation. The escalation is followed by the important phase of stabilisation, before a resolution strategy is specified, the corresponding planning drawn up and subsequently implemented.

Preliminary Phase

  • Gradually deteriorating economic situation
  • “Home-made” specific events (e.g. default of a major loan)
  • Exogenous (financial) crises

Escalation

  • Equity and liquidity shortfall
  • Intervention of responsible regulatory authority
  • Intervention of deposit protection schemes
  • Possible insolvency
  • Involvement of key stakeholders

Stabilisation

  • Safeguarding of liquidity
  • Identification of acute existential risks
  • Re-focusing of senior management
  • Introduction of measures to mitigate risk
  • Crisis communication

Specification of Resolution Strategy

  • Assessment of the situation under new framework conditions
  • Development of options and strategies for solutions
  • Preparation of financial/action plan
  • Approval of governing bodies and stakeholders

Implementation

  • Creation of viable entities
  • Dismantling of unviable divisions/business units

Levers for Success in the Resolution Process

Dealing successfully with a crisis is founded on the consistent and timely use of five important levers for success.

Erfolgshebel im Resolution-Prozess Erfolgshebel im Resolution-Prozess

Resolution Management in all Phases

In all phases of dealing with the crisis, Resolution Management can contribute towards a successful outcome in various operational areas. At all times our actions are guided by risk and results, in order to fulfil our mission: the minimisation of capital losses.

Preliminary Phase

  • Risk assessments and analyses of threats
  • Development of action alternatives to safeguard liquidity and capital
  • Formulation of contingency plans (balance sheet, operations, communications)

Escalation

  • Resolution Management experts with experience in such extreme situations provide support on the ground
  • Close cooperation with auditors, external legal advisors, regulators and, where required, insolvency administrators

Stabilisation

  • Implementation of contingency processes for liquidity and asset-liability management
  • Exercise of monitoring functions
  • Creation of transparency (balance sheet risks, platform/processes, personnel issues)

Specification of Resolution Strategy

  • Development of appropriate solution strategies for the respective divisions/business units
  • Drafting of a financial and action plan
  • Management of interfaces to key stakeholders
  • Preparation of presentations and draft resolutions

Implementation

  • Selection of the assets/liabilities (incl. derivatives) required for the implementation of the future strategy
  • Formulation of an adjusted strategy for funding and collateral management
  • Support with immunisation/dismantling of the derivatives portfolio
  • Drafting of wind-down plans
  • Projects for closure of (foreign) locations
  • Support with sale processes (real estate, office equipment)
  • Support with new personnel strategy, incl. co-determination
  • Development and implementation of an archiving strategy
  • Support with alignment/conversion of the IT platform