What the concept is
A crisis management group, abbreviated CMG, is a standing forum bringing together the home authorities and the key host authorities responsible for a global systemically important bank. Its role is to enhance preparedness for, and coordination in, the recovery and resolution of a cross-border group. Membership typically includes the supervisory authorities, central banks, resolution authorities and finance ministries of the jurisdictions that host the bank's material operations, with the home authority coordinating.
The crisis management group is not a creature of European Union legislation. It is a concept established by the Financial Stability Board in its Key Attributes of Effective Resolution Regimes, the international standard for resolution frameworks. The FSB expects the home and key host authorities of every global systemically important bank to maintain a CMG, and to work through it on recovery and resolution planning, resolvability assessment, and the institution-specific cross-border cooperation arrangements that support coordinated action in a crisis.
How it works in practice
The crisis management group provides the venue in which authorities across jurisdictions agree how a global bank would be resolved. It develops and keeps current the group resolution plan and the resolvability assessment, and underpins the cross-border cooperation agreements that set out how home and host authorities would share information and coordinate the use of their powers. For a group resolved through a single point of entry strategy, the CMG is where host authorities gain assurance that a home-led resolution would protect their local operations; for a multiple point of entry group, it coordinates the several resolution actions.
Within the European Union the function performed by a CMG at the global level corresponds most closely to the resolution college, the standing EU body through which the group-level resolution authority and the authorities of the group's entities coordinate resolution planning. For a European global systemically important institution, the resolution college and the CMG overlap in purpose, with the college providing the EU-law footing and the CMG the wider international forum.
Legal basis
The crisis management group has its basis in the FSB Key Attributes of Effective Resolution Regimes, which are international guidance rather than EU legislation, so it is not established by a BRRD article. The closest European counterpart, the resolution college, is provided for in the BRRD, Article 88, which sets out how resolution authorities cooperate on cross-border groups within the Union. The two operate alongside each other for European global systemically important institutions.
Practical relevance for banks and investors
For a global systemically important bank, the crisis management group is where the credibility of its cross-border resolution is tested, and where impediments to a coordinated resolution are surfaced and addressed among the relevant authorities. For investors, the existence and functioning of a CMG is a marker of resolution preparedness: it indicates that the home and host authorities have a shared plan for the group, which reduces the risk of a fragmented, value-destroying failure across jurisdictions.