The Bank of England has published the "Dear CFO" letter sent by its Resolution Directorate to the Chief Financial Officers of relevant entities in financial groups within the remit of the BoE's principles-based "Statement of Policy on Valuation Capabilities to Support Resolvability." The SoP was published in June 2018 and sets out the BoE's expectations on the minimum standard of valuation capabilities that firms should have in place to ensure that their valuations are sufficiently timely and robust to support the effective resolution of the firm. Firms within the remit of the SoP will need to ensure that suitable capabilities are in place by January 1, 2021.
 
In the Dear CFO letter, the BoE sets out supporting and purely illustrative guidance on the requirements of the SoP. The guidance is split into two parts, covering valuations in the context of resolution and firm capabilities on a business-as-usual basis. It is intended to inform firms of the factors that the BoE anticipates that an independent valuer would consider when undertaking resolution valuations, but does not prescribe how those valuations should be undertaken.
 
The BoE has also asked recipients of the Dear CFO letter to complete a survey on how they intend to implement the requirements of the SoP, to assist it with its future engagement with firms on their valuation capabilities.
 
View the Dear CFO Letter.
 
View details of the Statement of Policy on Valuation Capabilities.