How Resolution works

The JRA works with banks when they are healthy to ensure everything is in place should a resolution be needed. If a bank fails, we are responsible for implementing resolution of that bank. The following sections explain how resolutions works:

What does it mean to be resolvable?

To be ‘resolvable’ a bank needs to have arrangements and plans in place so the JRA can carry out a resolution if it fails. Think about resolvability in terms of whether a bank:

  • Has enough resources to support a resolution – e.g. to absorb its losses and recapitalise the firm, and continue to pay its financial obligations;

  • Is able to continue doing business during and after resolution; and

  • Is able to co-ordinate and communicate effectively within the firm, with the authorities and with the market.

The JRA has set requirements that Jersey Banks must meet to be considered resolvable. These vary depending on the size and nature of the Jersey Bank and are being rolled out over a three year period from August 2023 to June 2026.  Details can be found in our Policy Statement 2023/02 'Resolution Planning and Resolvability'.

What is Resolution Planning?

Working with each bank, a resolution plan will be developed. Each plan will set out the actions that will be taken if a bank fails. The JRA will review these plans periodically and update them where necessary.

A preferred resolution strategy for each bank will be identified, which will depend on things like how much harm its failure would cause to the island and what kind of structure it has.

The three main strategies are:


The banks equity is written off, and debts written down, to absorb losses. Then it is recapitalised – the debtholders whose debt was written down are issued equity and become the new shareholders. In the medium-term, it would be restructured to address the causes of failure and restore market confidence.

Sale or Transfer

The bank or some of its assets and liabilities are sold immediately or after a short period. This may include transferring its critical functions to a temporary ‘bridge bank’ controlled by the JRA, before being sold on.

Bank Winding up

The bank would enter a form of insolvency. The Jersey Bank Depositors Compensation Scheme (DCS) would provide protection of up to £50,000 for deposits placed in Jersey per person, per Jersey banking group, for local and international depositors in line with international standards.

For more information regarding the Jersey Bank Depositors Compensation Scheme (DCS) refer to its website

Single or Multiple Point of Entry Resolution?

Resolution strategies are based on two approaches: “single point of entry” and “multiple point of entry”, below describes the difference between these strategies:

  • Single point of entry (SPE) - A single point of entry resolution involves the application of resolution powers for example, bail-in and or transfer tools, generally at top parent or holding company by a single resolution authority, most likely by the authority in the jurisdiction that has responsibility for the global consolidated supervision of a group.

  • Multiple point of entry (MPE) - A resolution strategy that normally involves the application of resolution powers by two or more resolution authorities to different parts of a group and is likely to result in a break-up of the group into two or more separate parts. The resolution powers applied to the separate parts need not be the same and could include resolution options such as bail-in within resolution, use of a bridge bank and or transfer of business or wind-down.

  • The SPE approach is more likely to be suitable for banks that are centrally structured and operated, and are mainly funded through the parent company, and that can transfer losses from operating companies to the parent company. On the other hand, the MPE approach is more likely to be suitable for banks that have material subsidiaries that are independently operated and funded.
What is Minimum requirement for own funds and eligible liabilities (MREL)?

MREL serves to prevent a dependence on public financial support, helping to ensure that shareholders and creditors bear the cost of failure by absorbing losses and recapitalising the failed bank.

MREL is a separate minimum requirement set by resolution authorities to ensure that a bank maintains sufficient eligible instruments to facilitate the implementation of the preferred resolution strategy.

The JRA is responsible for setting MREL requirements for each Jersey Bank, in consultation with the JFSC.

It is expected that, in practice, this will only apply to Jersey Incorporated Banks. The JRA will consult with Home Resolution Authorities when setting MREL requirements for Jersey Incorporated Banks that are part of a group.

When is a firm resolved?

The Resolution Law specifies conditions that must be met prior to the application of a resolution tool or when applying specific tools. In particular, that the bank is failing or is likely to fail; that it is not reasonably likely that any other action will prevent failure within a reasonable timeframe; and that it is in the public interest.

If the resolution conditions are met, the JRA may use one or more of its Resolution Powers or Tools to resolve the bank.

The JRA's Approach to Resolution Planning

The banking sector in Jersey is comprised predominantly of Jersey Branches of Overseas Incorporated Banks. The handful of Jersey Incorporated Banks are themselves subsidiaries of banking groups headquartered in other jurisdictions. No Jersey Banks are headquartered in Jersey.

Just over half of Jersey Banks are part of Banking Groups that have been designated by the Financial Stability Board as Global Systemically Important Banks and several other Jersey Banks are part of Banking Groups designated as Domestic Systemically Important Banks in their home jurisdictions. As such, most Jersey Banks are subject to Resolution Planning at a group level.

The JRA expects to coordinate closely with relevant Home Resolution Authorities in developing and implementing a local resolution plan that aligns to group preferred resolution strategies. Where the JRA can obtain sufficient comfort that group resolution plans provide adequate protection to Jersey Banks critical functions during a resolution event, the level of local resolution planning and preparations for resolution can be reduced accordingly. In such scenarios, the JRA will focus its resolution planning activities on:

  • Ensuring appropriate coordination and communication plans are in place; and

  • Ensuring that the Jersey Bank’s local operations have been adequately captured by group preparations for resolution and, if not, ensuring sufficient local preparations are implemented.

Recognition of third-country resolution actions

The JRA may be required to decide whether to recognise, and give effect to, resolution actions taken in other countries (third-country resolution actions). These recognition decisions relate to resolution actions carried out under the law of a country or territory outside of Jersey (a third-country) managing the failure or likely failure of a third-country bank. When notified the JRA must decide whether to recognise it (a recognition decision), subject to certain criteria being met and approval sought.

Why do we need recognition?

The Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes) promote cross-border cooperation between authorities, including recommending that countries provide transparent and expedited processes to give effect to third-country resolution actions.

The international nature of banking means cross-border cooperation is required to achieve legal certainty and equivalent protections for resolution measures that have effects in multiple jurisdictions. Achieving legal certainty and improving cooperation decreases the likelihood of disorderly outcomes and supports continuity in cross-border financial services.

Why is the JRA required to act upon recognition requests?

Article 89 of the Resolution Law requires the JRA, once notified of a third-country resolution action related to a third-country bank, to make an instrument that recognises the action, refuses to recognise the action, or recognises part of the action and refuses to recognise the remainder.

Recognition by the JRA, provides certainty as to whether such a third-country resolution action has effect under Jersey law.

In what sort of scenarios would the JRA be required to make a recognition decision?

The JRA might have to make a recognition decision in relation to the single point of entry resolution, by bail-in of a bank with a hosted subsidiary or branch in Jersey.

Alternatively, a third-country resolution authority might write down liabilities governed by Jersey law. The JRA may be asked to make a recognition decision in this situation.

The JRA may also have to recognise the transfer of property located in Jersey.

In addition to recognition, the JRA also has the ability to support a resolution carried out by a third-country resolution authority (for example, by ordering a transfer of property in Jersey to a bridge institution established by the third-country resolution authority).

This is not an exhaustive list of all possible circumstances when the JRA might have to make a recognition decision.

What sort of institutions does this relate to?

A recognition decision must be made where the JRA is notified of a third-country resolution action, related to a third-country bank. Broadly, this is an action to manage failure or likely failure of such institutions under the law of another country or territory outside of Jersey, which is broadly comparable in terms of objectives and anticipated results to a resolution carried out under the Jersey resolution regime.

A “third-country bank” is an institution established in a country or territory other than Jersey that would, if it were established within Jersey, be regarded as a bank under the Resolution Law. This includes deposit-takers and their parents and subsidiaries.

How does the JRA decide whether to recognise a third-country resolution action?

In order to make a recognition decision, the JRA must decide whether the third-country resolution action is broadly comparable in terms of objectives and anticipated results to a resolution carried out under the Jersey resolution regime (meaning the exercise of a stabilisation option in relation to a corresponding entity in Jersey). Where the third-country action is not of this nature, other options for cross-border assistance may be available through the Jersey courts.

The JRA may only make a recognition decision subject to the approval of the Minister for External Relations and Financial Services (the Minister) and to Article 89(2) of the Resolution Law.

The JRA may refuse to recognise a third-country resolution action (or any part of it) if it is satisfied that one or more of the following conditions are met:

  • Such recognition would have an adverse effect on financial stability in Jersey;

  • The taking of a resolution action by the JRA in relation to a branch located in Jersey of a third-country bank is necessary to achieve one or more of the resolution objectives;

  • Under the third-country resolution action, creditors (including, in particular, depositors) located or payable in Jersey would not, by reason of being located in Jersey, receive the same treatment, and have similar legal rights, as creditors (including depositors) who are located or payable in the third-country jurisdiction concerned;

  • Recognition of, and taking action in support of, the third-country resolution action (or the relevant part of the third-country resolution action) would have material fiscal implications for Jersey; or

  • Such recognition would be unlawful under Article 7(1) of the Human Rights (Jersey) Law 2000.

What information does the JRA need to make its decision?

Effective prior engagement between the third-country resolution authority and the JRA will help support the transparent and expedited process envisaged in the Key Attributes. Therefore, the JRA encourages third-country resolution authorities to engage the JRA ahead of taking any resolution action that may require action from the JRA, including recognition. This gives the JRA time and flexibility to work with the third-country resolution authority when assessing the recognition request and supporting materials, and aids swift decision-making.

Third-country resolution authorities could also consider recognition as part of business-as-usual resolution planning and engagement. This would allow third-country resolution authorities, host and any other relevant authorities to consider the information and decision making that may be required in advance. In the event that the third-country resolution authority is unable to engage ahead of taking a resolution action, the JRA encourages the home authority to engage as soon as possible after taking the measures.

The information provided to the JRA may be shared with the Minister given their role in deciding whether to approve the JRAs recognition decision.