FSB practices paper on the operationalisation of transfer tools for resolution of banks

The Financial Stability Board (FSB) has published a practices paper outlining how authorities can operationalise transfer tools to ensure the orderly resolution of failing banks without taxpayer losses. Transfer tools, a key element of the FSB's "key attributes of effective resolution regimes", help maintain continuity of critical banking functions by transferring all or part of a failed institution to a private purchaser or bridge entity. The paper covers defining transfer perimeters, arrangements for operational continuity (such as transitional service agreements and management of third-party contracts) and approaches to marketing the transfer perimeter under tight timelines and confidentiality. It also explains mechanisms for loss absorption in line with creditor hierarchy, including write-downs and conversions, and outlines challenges in cross-border execution. Case studies of real resolution cases are also included, illustrating operational issues and practices to enhance readiness for deploying these tools effectively.

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