EY webinar zeros in on importance of recovery plans for licensed commercial banks (LCBs) and licensed specialized banks (LSBs)
The CBSL Direction No. 09 of 2021[ 1] requires to identify the full range of recovery options available to a licensed bank to deal with shocks to capital, liquidity, and all other aspects that may arise from institution- specific stresses, market-wide- stresses, or a combination of both, effective 30 June 2022.
Each licensed bank shall have an RCP Governance Framework in place and shall identify critical functions and critical shared services of the banking group; recovery indicators, recovery triggers, recovery actions ( short term, long term, and intermediary); and conditions or threshold for activation of resolution measures.
Recovery plans (RCP) components to draw from and align with existing risk management processes on capital, liquidity, stress testing, business continuity, among others.
A properly formulated
RCP acts as a tool and prompts management to take appropriate actions to restore the bank’s financial strength and viability on time to prevent, mitigate, or manage the plausible adverse financial and non-financial impacts.
Ernst & Young Sri Lanka (EY
Sri Lanka), together with Ernst & Young India LLC (EY India), successfully conducted two webinars on the Central Bank of Sri Lanka (CBSL) Direction No. 09 of 2021 on Recovery Plans. The webinars were very wellreceived by the CRO Forum and risk and compliance professionals in the banking industry and was conducted by subjectmatter experts Rajith Perera, Partner – Financial Accounting Advisory Services,
EY Sri Lanka, and Sanjay Pantula, Director – EY India. The CBSL
Direction No. 09 of 2021requires to identify the full range of recovery options available to a licensed bank to deal with shocks to capital, liquidity, and all other aspects that may arise from institution- specific stresses, market-wide- stresses, or a combination of both.
Rajith Perera, Partner, Financial Accounting Advisory Services, EY Sri Lanka emphasized the importance of establishing a robust governance framework and effectively embedding RCP within the existing risk management framework. He also stressed the importance of looking at the RCP from a broader risk type perspective and not restricting RCP scope to capital, liquidity, and other selected risks.