CMN Resolution No. 5,187 — Recovery and Resolution Planning Process for Financial Institutions

Resolution No. 5,187

CMN RESOLUTION NO. 5,187, OF NOVEMBER 28, 2024

Provides for the recovery and resolution planning process for financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes it public that the National Monetary Council, in a session held on November 21, 2024, based on Article 4, caput, item VIII, of the aforementioned law, Article 9-A of Law No. 4,728, of July 14, 1965, Article 20, § 1, of Law No. 4,864, of November 29, 1965, Articles 7 and 23 of Law No. 6,099, of September 12, 1974, Article 1, caput, item II, of Law No. 10,194, of February 14, 2001, Article 6 of Decree-Law No. 759, of August 12, 1969, and Article 9 of Law No. 12,865, of October 9, 2013,

R E S O L V E D:

CHAPTER I
OBJECT AND SCOPE OF APPLICATION

Article 1. This Resolution provides for the recovery and resolution planning process for financial institutions and other institutions authorized to operate by the Central Bank of Brazil, with the objective of contributing to the maintenance of solidity, stability, and regular functioning of the National Financial System – SFN, the Brazilian Payments System – SPB, and the real economy.

Sole paragraph. The provisions of this Resolution, except for the guidelines embodied in the definitions referred to in Chapter II, do not apply to payment institutions, securities brokerage firms, foreign exchange brokerage firms, and securities distribution companies, which must observe the regulation issued by the Central Bank of Brazil, in the exercise of its legal powers.

Article 2. Institutions that meet the criteria provided for in specific regulation for classification in Segment 1 – S1 must:

I - implement recovery and resolution planning to respond to scenarios that compromise their viability; and

II - prepare and submit to the Central Bank of Brazil the Organized Exit and Recovery Plan – PRSO.

Sole paragraph. Recovery and resolution planning and the preparation of the PRSO must encompass:

I - all entities comprising the same prudential conglomerate; and

II - entities that perform main business lines, essential services, critical functions, or critical services, belonging to the economic group of the institution covered by the caput.

Article 3. The Central Bank of Brazil may determine the performance, in whole or in part, of recovery and resolution planning and the preparation of the PRSO by financial institutions and other institutions authorized by it to operate that are not classified under the criterion established in Article 2, caput, if it considers that they perform critical functions.

Sole paragraph. The Central Bank of Brazil:

I - will make public, by making it available on its website, the determination referred to in the caput; and

II - will set a deadline, not less than twelve months, for compliance with the determination provided in the caput.

CHAPTER II
DEFINITIONS

Article 4. For the purposes of this Resolution and its complementary norms, the following are considered:

I - recovery: application of measures aimed at restoring adequate levels of capital and liquidity and preserving the institution's viability, in response to stress situations;

II - resolution: set of measures adopted or determined by the Central Bank of Brazil when the unviability or the perspective of unviability of the institution is confirmed, with the objective of mitigating damage to the stability of the SFN, the SPB, or the real economy resulting from its discontinuation;

III - unviability: condition evidenced by one or more of the following situations:

a) insolvency;

b) liquidity insufficiency;

c) non-compliance with regulatory requirements and limits to which the institution is subject due to legal or regulatory norms, considering the adjustments determined by the Central Bank of Brazil, even if not reflected in the institution's accounting statements;

d) exposure to risk incompatible with the equity and internal control structures or that may compromise the regular functioning of the institution;

e) default on obligations assumed; and

f) occurrence of losses that may compromise the regular functioning of the institution;

IV - resolution regimes: regimes provided for in Article 1 of Law No. 6,024, of March 13, 1974, and Article 1 of Decree-Law No. 2,321, of February 25, 1987;

V - PRSO: document that records recovery and resolution planning;

VI - resolvability assessment: assessment of the viability and credibility of submitting an institution to resolution without causing significant adverse effects on the SFN, the SPB, or the real economy and without the injection of public resources;

VII - critical functions: activities performed by entities covered by the scope of recovery and resolution planning, as per Article 2, sole paragraph, of this Resolution, for third parties, whose discontinuation could compromise the stability of the SFN, the SPB, or the real economy, due to the size of their participation in market supply, their interconnections, their complexity, or other situations that prevent them from being immediately replaced by the market;

VIII - critical services: services provided to an entity, whose suspension would lead to the inability to perform critical functions;

IX - critical shared service: critical service provided to more than one business unit or entity;

X - main business lines: activities essential for the viability of the prudential conglomerate or economic group, in normal situations, as they are material sources of revenue, capital gain, or market value;

XI - essential services: services provided to one or more entities covered by the scope of recovery and resolution planning, whose suspension would impair the functioning of a main business line;

XII - separability: ability to segment and transfer critical functions or main business lines to an entity that is not part of the prudential conglomerate or economic group; and

XIII - transition institution: institution constituted or reorganized to which the assets, rights, and obligations of the institution subject to resolution are transferred, in whole or in part, aiming at the general or partial continuation of its business or activity.

CHAPTER III
SUPPORT STRUCTURE FOR RECOVERY AND RESOLUTION PLANNING

Section I
General Provisions

Article 5. Recovery and resolution planning must be integrated into information management, risk management, and capital processes.

Sole paragraph. Recovery and resolution planning presupposes the existence of:

I - management information systems aligned with strategies and planned measures; and

II - monitoring program.

Section II
Management Information Systems

Article 6. The institution must have management information systems capable of providing accurate and timely information, during normal operational periods and crisis periods, including during the course of a resolution regime eventually decreed, within the prudential conglomerate and the entities covered by the scope of recovery and resolution planning that compose it, which are essential to adequately implement the strategies and measures provided for in the PRSO, including, at a minimum, information necessary:

I - to assess the value of business units and relevant entities, regarding which a strategy of alienation or partial transfer of assets and liabilities has been defined; and

II - to identify the operational and financial interconnections existing between entities covered by the scope of recovery and resolution planning, including interconnections related to:

a) sharing of support services, personnel, and support infrastructure; and

b) provision of guarantees and exposures resulting from transactions between related parties, in Brazil and abroad.

§ 1. The institution must perform, within its own programming or if so determined by the Central Bank of Brazil, simulation exercises to test data production capacity, in normal and stress situations, evidencing results and respective corrective actions.

§ 2. The institution must be capable of performing, based on the information referred to in item I of the caput, the valuation of its assets, business units, and entities for purposes of alienation, incorporating, in this process, the time horizon necessary for its realization.

§ 3. The institution must keep updated and available to the Central Bank of Brazil:

I - inventory of information technology – IT assets highlighting the main computerized systems that support the critical functions and critical services performed by entities covered by the scope of recovery and resolution planning, identified with their description, providers, and their different access profiles, including those related to relevant services for data processing and storage and cloud computing, contracted from third parties in Brazil or abroad;

II - list of administrators of the entities covered by the scope of recovery and resolution planning and third-party providers of critical services, including their identification, emergency contact form, and description of their functions and responsibilities;

III - data supporting the identification and assessment of critical functions;

IV - description of the methods and processes involved in the assessment of assets, business units, and entities covered by the scope of recovery and resolution planning;

V - assets that can be offered as collateral to obtain liquidity financing, either through liquidity assistance lines by the Central Bank of Brazil or through access to other liquidity providers in the domestic market; and

VI - liabilities that can be reduced, extinguished, or converted into shares, for purposes of absorbing losses or internal recapitalization, in Brazil and abroad.

§ 4. Internal audit, in its assessment of the reliability, effectiveness, and integrity of management information processes and systems, must apply procedures that ensure these systems produce the information referred to in the caput.

Section III
Monitoring Program

Article 7. The monitoring program must comprise, at a minimum, indicators and other quantitative and qualitative information that:

I - allow adequate monitoring of the risks incurred by the institution;

II - reflect the magnitude and speed of change in the institution's economic-financial and liquidity situation;

III - allow the timely adoption of recovery and resolution strategies;

IV - consider the horizon necessary for recovery and resolution strategies to produce effects; and

V - consider the business model, nature, complexity, and risk profile of the institution.

§ 1. The monitoring program must establish critical levels for the set of most relevant indicators, with a view to monitoring risks and the eventual execution of recovery and resolution strategies.

§ 2. The indicators referred to in this article must be consistent with risk management and capital structures and with the Internal Capital Adequacy Assessment Process – Icaap.

§ 3. The Central Bank of Brazil may establish indicators and information that must be the subject of monitoring by the monitoring program, aiming at the effectiveness of the actions provided for in the PRSO.

CHAPTER IV
RECOVERY AND RESOLUTION PLANNING PROCESS

Section I
General Provisions

Article 8. Recovery planning must be guided by the preservation of the institution's viability, and resolution planning by the operational continuity of its critical functions.

Sole paragraph. Recovery and resolution planning comprises:

I - the prediction of stress scenarios;

II - the definition of strategies to address potential recovery and resolution situations; and

III - the self-assessment of recovery capacity and resolvability.

Section II
Stress Scenarios

Article 9. Stress scenarios must be comprehensive and include events that may threaten business continuity and the institution's viability.

Sole paragraph. Stress scenarios must be relevant to test the adequacy of critical levels defined in the monitoring program, the viability, and the effectiveness of recovery and resolution strategies.

Article 10. The Central Bank of Brazil may determine the performance of stress tests that include alternative stress scenarios, considered relevant for the recovery and resolution planning process.

Section III
Recovery Strategies

Article 11. The institution must predict a comprehensive set of recovery strategies, in response to different stress scenarios, with a view to preserving its viability.

Sole paragraph. The definition of recovery strategies must consider the maintenance of service supply, including those provided by third parties, necessary for the institution's operational continuity, and the assessment, at a minimum, of the following measures:

I - strengthening of capital and liquidity situation;

II - alienation of assets;

III - refinancing of debts;

IV - restructuring of liabilities;

V - access to financial support from entities belonging to the same economic group, if applicable;

VI - access to liquidity financial assistance lines, if applicable, regardless of the source nature; and

VII - changes in corporate or organizational structures, operating strategy, or business model of the institution.

Article 12. The adoption of recovery strategies, initiated by the institution, must be associated with the achievement of critical levels defined in the monitoring program and the potential materialization of a stress situation.

Sole paragraph. The institution's decision not to execute the strategies defined in the PRSO, when the occurrence of the provision in the caput is verified, must be duly justified and documented.

Section IV
Resolution Strategies

Article 13. The institution must predict a comprehensive set of resolution strategies, in response to different stress scenarios leading to resolution, with a view to ensuring the operational continuity of its critical functions.

§ 1. The definition of resolution strategies must consider the assessment, at a minimum, of the following measures and their adoption before or during the course of a resolution regime:

I - capitalization of the company;

II - transfer of shareholding control;

III - transfer of assets and liabilities;

IV - corporate reorganization, including through merger, consolidation, or spin-off; and

V - expropriation of share capital shares.

§ 2. The institution must assess the viability of each strategy and indicate the preferred one.

Section V
Continuity of Critical Functions

Article 14. In order to preserve the continuity of critical functions performed by entities covered by the scope of recovery and resolution planning, the institution must be able to ensure the continuity of critical services in the context of the materialization of scenarios leading to recovery or resolution.

§ 1. Service level agreements formalized for the provision of critical services must provide for the continuity of the supply of these services in the context of the materialization of scenarios leading to resolution, including after the event of the decree of a resolution regime.

§ 2. Contracts signed with third-party providers of critical services must include specific clauses that:

I - prevent contract termination motivated exclusively by events of the decree of a resolution regime; and

II - facilitate the transfer of the contract to a transition institution or a definitive acquirer and guarantee the continuity of service provision for a period of not less than twelve months.

Article 15. The institution must maintain mechanisms and instruments to enable, at any time, its operations that may result in liquidation, central deposit, or registration in a financial market system or payment in a payment arrangement to be transferred to a transition institution or a definitive acquirer that is a participant of the same financial market system or payment arrangement.

Section VI
Self-Assessment of Recovery Capacity and Resolvability

Article 16. The institution must continuously perform the self-assessment of recovery capacity and resolvability, comprising, at a minimum, the following dimensions:

I - data and information generation;

II - financial, in the context of the materialization of scenarios leading to recovery and resolution;

III - operational continuity of critical functions; and

IV - separability.

Sole paragraph. The self-assessment must identify potential barriers to recovery and resolution and the risks associated with their execution, including regarding the compatibility between the organizational structure and recovery and resolution actions.

Article 17. The institution must prepare an Action Plan for Elimination or Mitigation of Barriers and Risks to Recovery and Resolution and adopt measures to eliminate or mitigate the barriers and risks identified in its self-assessment of recovery capacity and resolvability.

Sole paragraph. The plan and adoption of the measures mentioned in the caput must be included in the PRSO and have their execution monitored by internal audit.

CHAPTER V
GOVERNANCE

Article 18. The board of directors and the board of directors, if any, must:

I - ensure the timely identification of those responsible for executing the strategies and measures of the PRSO;

II - have a comprehensive and integrated understanding:

a) of main business lines and essential services;

b) of critical functions and critical services;

c) of indicators and other information contained in the monitoring program;

d) of stress scenarios;

e) of recovery strategies;

f) of resolution strategies;

g) of the self-assessment process of recovery capacity and resolvability; and

h) of barriers and risks identified to recovery and resolution;

III - ensure the preparation of feasible and effective recovery strategies, including those involving other entities belonging to the economic group;

IV - ensure the preparation of feasible and effective resolution strategies, including those involving other entities belonging to the economic group;

V - ensure the effectiveness of the self-assessment process of recovery capacity and resolvability; and

VI - ensure the compatibility of the Action Plan for Elimination or Mitigation of Barriers and Risks to Recovery and Resolution with the institution's strategic planning and its timely execution.

Article 19. The board of directors and the board of directors, if any, are responsible for adopting the strategies provided for in the PRSO, except those executed under a resolution regime.

§ 1. The specific responsibilities of each director and member of the board of directors, if any, must be detailed in the PRSO.

§ 2. The director responsible under Article 26 must immediately notify the board of directors and, if applicable, the board of directors and the audit committee of the achievement of critical levels established for the indicators referred to in Article 7, § 1.

CHAPTER VI
ORGANIZED EXIT AND RECOVERY PLAN (PRSO)

Article 20. The PRSO, referred to in Article 2, caput, item II, must address:

I - the organizational profile;

II - the support structure;

III - the governance of the recovery and resolution process;

IV - recovery and resolution strategies;

V - the self-assessment of recovery capacity and resolvability;

VI - the Action Plan for Elimination or Mitigation of Barriers and Risks to Recovery and Resolution;

VII - the communication plan; and

VIII - other information established by the Central Bank of Brazil.

§ 1. The PRSO must report the results of the simulation exercises referred to in Article 6, § 1.

§ 2. The Central Bank of Brazil will regulate the format, content detail, and deadlines for submission and review of the PRSO.

§ 3. The PRSO must be approved, prior to submission to the Central Bank of Brazil, by the board of directors and the board of directors, if any.

Article 21. The Central Bank of Brazil may determine to the institution:

I - adjustments to the content of the PRSO;

II - evaluation by an independent auditor of the process of preparation, review, and approval of the PRSO;

III - provision of additional information; and

IV - total or partial execution of the strategies provided for in the PRSO.

§ 1. The execution of the strategies provided for in the PRSO does not prevent the adoption, by determination of the Central Bank of Brazil, of preventive prudential measures referred to in Resolution No. 4,019, of September 29, 2011.

§ 2. The scenarios or strategies provided for in the PRSO do not bind the Central Bank of Brazil in the decree of a resolution regime.

Article 22. The brief description of the PRSO must be available in the specific section of the institution's website containing information regarding risk management, as defined by the Central Bank of Brazil under current regulation.

Sole paragraph. The location of the information mentioned in the caput must be informed together with the published financial statements.

CHAPTER VII
FINAL PROVISIONS

Article 23. The following must be the subject of timely communication to the Central Bank of Brazil:

I - the achievement of a critical level established in the monitoring program;

II - the decision to adopt a recovery strategy;

III - the justified decision not to adopt any of the recovery strategies, when the occurrence of the provision in item I is verified; and

IV - the perspective of unviability situation.

Sole paragraph. The Central Bank of Brazil may set a specific deadline for each type of communication provided for in the caput.

Article 24. The Central Bank of Brazil may request, in the format and periodicity to be defined by it, any data and information referred to in this Resolution.

Article 25. The documentation supporting compliance with the provisions of this Resolution must be kept available to the Central Bank of Brazil for a period of five years counted from the date of submission of the PRSO.

Article 26. The institutions mentioned in Article 2, caput, and Article 3, caput, must indicate a director responsible for complying with the requirements established in this Resolution.

Article 27. Resolution No. 4,557, of February 23, 2017, published in the Official Gazette of the Union on March 1, 2017, shall enter into force with the following alterations:

“Article 17. ....................................................................................................................

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VII - in the Recovery and Organized Exit Plan – PRSO.” (NR)

Art. 28. The following are revoked:

I - Resolution No. 4,502, of June 30, 2016, published in the Official Gazette of the Union on July 4, 2016; and

II - Resolution No. 4,704, of December 19, 2018, published in the Official Gazette of the Union on December 21, 2018.

Art. 29. This Resolution enters into force:

I - on January 1, 2028, with respect to Art. 14, §§ 1 and 2, for contracts entered into prior to the publication date of this Resolution; and

II - on January 1, 2025, with respect to the remaining provisions, including Art. 14, §§ 1 and 2, for contracts entered into from the publication date of this Resolution onward.

Roberto de Oliveira Campos Neto
President of the Central Bank of Brazil