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.
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