How about putting in place “robust contractual arrangement” to support a transfer strategy? – whether the requirement to maintain robust contractual arrangement applies to a member bank’s existing or a new contract?

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Under the resolvability assessment, potential impediments may be identified through the perspectives of operational continuity, management information system, liquidity and funding requirements. For example, a member bank’s information technology infrastructure should be capable to generate timely and accurate information to support an informed and timely valuation by PIDM during a transfer in resolution.

From the liquidity and funding perspectives, a member bank should demonstrate capability to estimate funding requirements during a resolution, including identifying available collateral for emergency funding on a timely basis.

Examples of robust contractual arrangement to support an effective transfer are the inclusion of “resolution-proof” provisions in a member bank’s contract which should:

1. prevent automatic termination, modification or suspension of the contract in the event of the member bank’s entry into resolution or the exercise of resolution powers by the resolution authority;
2. allow a service provider to support an orderly transition within a reasonable timeframe and cost; and
3. allow services and liabilities of a service provider to be transferred, novated or assigned.

A robust contractual arrangement would be required to be maintained for all material contracts (existing or new) of the member bank that may impact operational continuity during resolution.

Further details on the feasibility assessment and resolvability expectations will be issued by PIDM accordingly in due course.