Speech by SRB Board Member Slavka Eley - "From resolution planning to operational crisis readiness in the Banking Union""

[Check against delivery] 

Ladies and gentlemen, 

It is my pleasure to address you today. 

The first day of SRB conference is focused on the work of young researchers in the field relevant for banking resolution. 

For us, practitioners, a solid theoretical foundation is vital for our work. Your papers, and exchanges over these days, are strengthening that foundation.

As a Board Member in charge of resolution planning and decisions, my responsibility is to ensure that the legal and economic framework behind resolution, translates into sound implementation of planning and execution of resolution for the European Banking Union’ banks.

Having this in mind, let me share with you a perspective on preparing practically for the next crisis.

First of all, I will outline how the Single Resolution Mechanism’s strategy seeks to enhance our overall crisis readiness.

Then, I will turn to where we stand now — in our day-to-day work with banks — and explain how we prepare for operational crisis readiness at the SRB, particularly through our simulations and our valuation work.

Finally, I will detail our planned activities, always carried out in close cooperation with the industry and other key stakeholders.

So, let me begin by highlighting that reinforcing our crisis preparedness lies at the very heart of the SRM’s mandate. 

This strategic objective is one of the pillars of our current strategy - the SRM Vision 2028 – which is guiding our work.

Since its establishment, the SRM has managed a number of crises cases, including the resolution of two institutions under the direct remit of the SRB.

Building on these experiences — as well as on dry run exercises and simulations — we continue to improve our crisis preparedness and management capacities, together with the National Resolution Authorities. 

The aim is simple: to be ready to address effectively both types of risks, known and emerging ones.

Throughout the years, banks have steadily improved their resolvability profiles. But what does a resolvable bank really mean in practice?

Resolvability — like resilience — is neither a static condition nor a binary state. Building resilience and resolvability is an iterative process. It requires SRB and banks to adapt continuously to rapidly changing market conditions and emerging risks.

This is why we regularly refine our resolvability assessment — to ensure that banks’ capabilities evolve in line with the risk environment.

Today, for instance, in the financial services we face growing dependencies on critical service providers, in particular technology providers. We see the AI rapidly entering banking operations, and also heightened cyber-security threats. 

While authorities are well equipped to handle traditional financial crises, we must now adapt our approaches and tools to address new potential sources of crises — such as those triggered by operational failures, cyber incidents, or technological disruption.

In this context, we ask banks to conduct business continuity exercises, testing the resilience of their ICT systems and related management processes.

The journey toward resolvability is, at its core, about one thing: ensuring that a bank is prepared to withstand an existential crisis — whatever form that crisis may take.

But it is not only banks that need to be ready — resolution authorities have their work to do as well. What does ‘being ready for crisis’ mean for SRB?

At the SRB, we have been preparing extensively to enhance our Operational Crisis Readiness — basically, being able to act swiftly and take decisive measures tailored to each unique scenario.

And this readiness is just as dynamic. It requires continuous refinement, regular evaluation, and constant adaptation to emerging threats. Above all, it demands a deep understanding of banks — their individual profiles, their systemic relevance, and the potential avenues for effective intervention.

What do we do to ensure readiness? 

Number of components underpin Operational Crisis Readiness at SRB. In this context, we apply three pillars of operational crisis readiness – procedures, tools and trained people:

• Firstly, comprehensive crisis policies and procedures enable prompt, decisive action. The SRB has developed ready-to-use templates, operational guidance, and “Flashcards” covering the full crisis cycle, from early detection of a failing bank to post-resolution activities. These documents cover the main types of resolution tools, such as bail-in execution and transfer tools. We have also strengthened governance arrangements to operationalise resolution tools with national authorities. Notable examples include National Handbooks for each jurisdiction. 

• Secondly, the SRB has invested heavily in its operational toolkit. This includes, for instance, development of a bail-in calculator and the Ready for Crisis platform, which ensures secure communication in crisis among key stakeholders.

• Thirdly, and most importantly, our people. We prioritise specialised crisis training, practical exercises and expert networks to foster a culture of preparedness. This ensures our teams can turn their expert knowledge into effective action.

Operational Crisis Readiness also underpins on two critical elements: simulation exercises and valuation capabilities.

Let me start with simulations.

Dry runs are a particularly powerful tool in this context. They are invaluable opportunities to stress-test our theoretical frameworks and resolution strategies in life-like scenarios with realistic time pressures.

Over the past year, the SRB coordinated a number of simulations focused on the initial phases of a crisis, as well as the individually designed dry runs focused on selected aspects of resolution tools, such as bail-in execution or sale-of-business. Participants from the SRB and National Resolution Authorities also tested not only application of the tools but also cooperation with key stakeholders, including the ECB and the European Commission.

Our simulation activities also extend beyond the Banking Union, for instance, routinely testing crises with our other European Union partners but also with American and British colleagues.

By conducting dry runs, the SRM identifies potential vulnerabilities in application of tools and refines its methodologies, before a real crisis would materialise. Preparedness therefore moves beyond plans and briefings — into tested operational capability.

Dry runs have become a core to our work. They test our plans, and ultimately complete them. What seemed like a trivial issue in planning phase, may become a central problem when testing the strategy. Small operational frictions, for instance, can generate major delays and so preparation beforehand makes the difference for orderly outcomes.

Another important element of Operational Crisis Readiness is the capability to conduct valuation in crisis.

Accurate valuation is central to any resolution process. It enables the SRB to take informed and timely decisions, based on a comprehensive assessment of assets and liabilities. After all, you cannot sell a bank — especially not in a crisis — without reliable, high-quality data.

By developing valuation tools and methodologies that incorporate complex financial metrics, we strengthen our ability to assess banks’ financial positions with precision. To this end, the SRB invests in dedicated models and in building an internal network of trained valuation experts.

The recent publication of the SRB’s Expectations on Valuation Capabilities aims precisely at enhancing banks’ preparedness to support timely and robust valuations. It sets out expectations on regularly updated resolution data repositories, and on the development of clear valuation playbooks.

Data and valuation perfectly illustrate why banks and resolution authorities must be equally prepared. Banks may produce excellent data. However, that data is of little use, if resolution authorities are not ready to analyse it and act on it swiftly. On the other side, the SRB can have a perfect valuation tool, but it will not be helpful in crisis, if banks are not able to provide the data needed.

Let me move now onto what lies ahead for SRB? 

Looking ahead, several strategic initiatives will further strengthen our crisis readiness. Expanding both, the scope and the complexity of our dry runs will be central to this effort. SRB has developed a multiannual dry runs plan, which is currently being implemented in the form of large-scale exercises enabling hundreds of resolution experts to be trained and to enhance their crisis readiness.  Going forward, these exercises will be increasingly integrated with bank-led testing, fostering a coordinated approach in which banks and authorities jointly refine resolution methodologies.

While our teams will keep refining the resolution plans, new initiatives will encourage banks to engage more deeply in testing their resolvability capabilities, generating insights and reinforcing the collaboration with resolution authorities.

Our teams will continue their resolution planning work, while also preparing crisis ready documentation that can be tested through simulations. In this context, the creation of a comprehensive crisis documents repository is another priority. This repository aims at ensuring rapid access to critical materials needed in crisis, and strengthening decision-making capacity across the Banking Union.

And of course, one particularly exciting area ahead — with tremendous potential — is our cooperation with academia.

Resolution is an increasingly rich and relevant field for research. It is not only operational; it is also deeply analytical. For that reason, we need continued academic research to inform and strengthen practice in all resolution-related areas.

Academic contributions are invaluable when designing plausible crisis scenarios for simulations and stress-testing exercises. They also play a crucial role in identifying emerging sources of systemic risk — whether stemming from non-bank financial intermediation, technological vulnerabilities, or cross-border spill-overs. This is particularly important when analysing contagion channels across banks, non-bank financial intermediaries, and the real economy.

Academia can also contribute by evaluating past cases and extracting lessons learned, best practices, and policy-relevant insights. In fact, for those interested, during the upcoming coffee break you may join a poster session dedicated to a discussion of the Sberbank case.

Our cooperation should continue to deepen over time. Our plans, our testing, and ultimately our decisions can benefit greatly from the growing body of academic work on resolution.

In conclusion, ladies and gentlemen, over the past decade banks and resolution authorities have built substantial capabilities. Today, our focus is on ensuring that these capabilities are truly operational.

This is a collective endeavour — one that requires commitment from both banks and authorities. That is precisely why the SRM’s Operational Crisis Readiness is so central to our mission. We must be as prepared as well as the banks we oversee.

Through dry runs, strengthened valuation capabilities, and dedicated training initiatives, we pursue this objective with determination. The result will be a more resilient, more shock-resistant Europe.

The research you produce and the knowledge you generate are essential inputs into this work.

And with that, let me congratulate all participants in the Young Research Award — and in particular, its future winner[s].

Thank you for your attention.