Resolution planning

For each bank, DNB prepares a resolution plan and a resolution strategy to determine the approach should the bank fail. This is called resolution planning.

Resolution strategy


The resolution strategy sets out if and how a bank will be resolved in the event that it runs into difficulties. A resolution strategy involves the following steps: 

1.DNB carries out a "public interest test" to assess whether resolution is necessary to ensure continuation of the bank's critical functions, protect financial stability and prevent the government from having to foot the bill. If that is not the case, the bank will be allowed to fail. 

2.Should we decide to resolve the bank, we will determine which resolution tools will be used should the bank fail.

3.There are two types of resolution strategies for banking groups operating in multiple countries:

  • The Single Point of Entry (SPE) model. The resolution authority of one country intervenes, regardless of the country or countries in which the losses occurred. The intervention is effected at the parent company level and the bank is continued in its entirety.
  • The Multiple Point of Entry (MPE) model. Multiple resolution authorities intervene. In this model, a banking group may be split up to continue in separate parts. 

Resolution plan

The resolution strategy is then translated into a resolution plan, which details the steps that have to be taken should a bank run into trouble. The resolution plan is updated annually, or in the interim if the bank faces a significant change. In principle, a full resolution plan must be drawn up for every single bank. However, if we decide that a bank can be allowed to fail, a simplified plan will suffice. 


Failing banks that go into resolution should have sufficient capacity on their balance sheet to absorb losses (loss-absorbing capacity). Starting in 2017, resolution authorities can impose a minimum requirement for own funds and eligible liabilities (MREL) on European banks. As of 1 January 2019, globally systemically important banks (G-SIBs) must comply with the total loss absorbing capacity (TLAC) standard of the Financial Stability Board (FSB), an international consultative body. 

Read more about MREL/TLAC 

Resolvability assessment

The final step in the resolution planning process is the resolvability assessment. We use this to assess the feasibility of a resolution plan. The assessment may reveal obstacles to a bank's resolution process, such as:

  • The bank's MREL is insufficient.
  • The bank's structure is too complex.
  • The bank holds many highly illiquid assets.
  • The bank has provided insufficient information, which means we cannot accurately assess its value if it fails.

If the assessment reveals such obstacles, we will ask the bank to remove them and impose measures if necessary.