US Agencies Announce Results of Assessment of Bank Resolution Plans
FDIC and FED (the US Agencies) announced their assessment of the resolution plans of the largest and most complex domestic banks. The Agencies did not find any deficiencies or weaknesses that could result in additional prudential requirements for these banks, if not corrected. However, plans from six of the eight banks had shortcomings or weaknesses that raise questions about the feasibility of the plans, but these weaknesses are not severe enough to qualify as a deficiency. The plans to address the shortcomings are due to the agencies by March 31, 2020.
Resolution plans, commonly known as living wills, describe a bank's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure. In the plans of Bank of America, Bank of New York Mellon, Citigroup, Morgan Stanley, State Street, and Wells Fargo, the Agencies found shortcomings related to the ability of the firms to reliably produce, in stressed conditions, data needed to execute their resolution strategy. Examples include measures of capital and liquidity at relevant subsidiaries. The agencies did not find shortcomings in the plans from Goldman Sachs and J.P. Morgan Chase. The agencies also announced that Bank of America, Goldman Sachs, Morgan Stanley, and Wells Fargo successfully addressed prior shortcomings identified by the agencies in their December 2017 resolution plan review.
The feedback letters have been generated for the assessed banks. For the six banks whose plans have shortcomings, the letter details the specific weaknesses and the actions required. Overall, the letters note that each firm made significant progress in enhancing its resolvability and developing resolution-related capabilities but all firms will need to continue to make progress in certain areas. The feedback letters confirm that the Agencies expect to focus on testing the resolution capabilities of the firms when reviewing their next plans.
At present, the largest, most complex FED-supervised banking organizations are required to file resolution plans by July 01 of each year. All other organizations that are supervised by FED and are subject to the resolution planning rule are required to file by December 31 of each year.
Related Links
Keywords: Americas, US, Banking, Resolution Plans, Large Banks, Systemic Risk, Living Wills, US Agencies
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
PRA Publishes Final Policy on PRA110 Reporting Frequency ThresholdRelated Articles
BCBS Amends Capital Treatment of Non-Performing Loan Securitizations
BCBS published a technical amendment to the capital treatment of securitizations of non-performing loans by banks.
BoE to Move Statistical Data Collection to BEEDs Portal
BoE announced that the Data and Statistics Division is planning to move collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.
APRA Updates Reporting Standards and Guidance for EFS Data Collection
APRA published the updated reporting standards and guidance for the collection of Economic and Financial Statistics (EFS), following a consultation process. Also published was a response letter to the feedback received on the proposal for amending the EFS reporting standards and guidance.
EC Consults on Criteria for Environmentally Sustainable Activities
EC is consulting on a draft delegated regulation to supplement the Taxonomy Regulation (2020/852) by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as environmentally sustainable.
IFRS Examines Incorporation of Climate Risk Issues into IFRS Standards
The IFRS Foundation published material highlighting the ways in which existing requirements in IFRS standards require companies to consider climate-related matters when their effect is material to the financial statements.
EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB Begins First Phase of Post-Implementation Review of IFRS 9
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB Report Examines Progress in Resolvability of Systemic Institutions
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA Benchmarks National Insolvency Frameworks Across EU
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
