The Cayman Islands Monetary Authority (CIMA)’s 70-day consultation on mandatory bank recovery plans closes at 5pm on 30 January, marking the final deadline for industry input.
Private sector associations representing banks, credit unions and development banks have one week left to submit formal feedback.
The consultation invites regulated deposit-taking institutions to outline how they would restore financial viability during severe stress without relying on taxpayer-funded support or destabilising the wider financial system.
Under the proposals, recovery plans must address multiple elements of crisis readiness.
CIMA’s framework requires institutions to demonstrate governance arrangements, early-warning indicators, stress scenarios, credible recovery options, communication strategies, testing and critical functions analysis.
Boards of directors would be responsible for annual review and approval of each plan, with clearly defined roles for senior leadership and oversight structures to ensure operational readiness.
Institutions must also stress-test plans against at least three severe scenarios (market-wide, institution-specific and combined threats) and identify ‘points of near failure’ that trigger recovery actions.
The recovery options component must include credible actions — such as asset sales, capital raising or business line adjustments — tailored to each institution’s risk profile and executed according to specified timelines.
CIMA updated its combined recovery and resolution planning framework following industry feedback that separating the two would improve clarity and operational usefulness.
The recovery planning consultation document emphasises proportional application – meaning smaller or less complex institutions will face requirements scaled to their size and risk profile.
The proposed rules are designed to align with Financial Stability Board standards and incorporate recommendations from an International Monetary Fund technical mission in March 2025 on strengthening crisis management and resolution frameworks.
