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Creating a recovery plan in compliance

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Creating a recovery plan in compliance with BaSAG

Porsche Holding Salzburg is a subsidiary of Volkswagen Group and operates in automotive wholesale and retail for the VW Group and other manufacturers. Porsche Bank AG—the financial services provider within the holding—primarily ensures sales financing of automotive sales and thus represents a major pillar of the overall strategy. The Austrian-based bank operates in 14 countries in Europe and South America.

Based on the EU directive for the recovery and resolution of credit institutions and the national transposition by means of the Austrian Federal Act on the Recovery and Resolution of Banks (BaSAG), Porsche Bank was obliged to create a recovery plan by September 30, 2015. Despite the bank’s comparatively low total assets and clearly defined business model, the Financial Market Authority imposed comprehensive requirements for creating a recovery plan on Porsche Bank due to its international activities. To ensure a successful, timely and efficient implementation of the requirements, Porsche Bank asked zeb to support them in creating the recovery plan.

1. Systematic:
Implementation

As a first step, zeb provided a client-specific structure document to specify the cornerstones and framework for creating the recovery plan. This document was then used for agreeing on the recovery plan’s main content together with the client (see figure).

Afterwards, the project team analyzed the business model, derived key business activities and identified risk drivers before tackling the indicators and the governance. The goal was to enhance Porsche Bank’s governance and monitoring systems so that the bank could
rapidly respond to crises. Starting from the individual business activities, zeb and the client identified and evaluated possible actions and recovery measures. The measures that were regarded as most appropriate were validated through specially developed stress scenarios
and models, complemented by a simulation of the organization’s ability to act. In addition, the team developed a communication manual, a standardized information management and a prioritized road map for reducing identified obstacles. To assure the recovery plan’s necessary quality, the employees of Porsche Bank and zeb continuously and thoroughly discussed and agreed on respective issues.

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2. Effective:
Results

In a final overall review, the zeb project team reviewed the quality of the recovery plan in terms of full compliance with regulatory requirements. Thanks to the close and efficient cooperation between Porsche Bank and zeb, the team successfully created the plan in a short time and thus laid the foundation for an enhanced total bank management.

3. Future-proof:
Outlook and conclusion

Due to the targeted exchange of knowledge during the project, Porsche Bank is now able to independently enhance and update the recovery plan. In the future, early warning and recovery indicators will be monitored as part of regular risk reporting. By embedding recovery governance into the existing corporate governance, the project team ensured that required measures can be initiated
at any time. As a result, the bank will be able to identify market developments early enough to counteract them by calling upon a predefined set of measures. Porsche Bank is now perfectly prepared for any crisis situations.

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Dr. Michaela Schneider

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