US Agencies Provide Large Banks Information for Next Resolution Plans
US Agencies (FDIC and FED) are providing information to the eight largest and most complex domestic banking organizations to guide their next resolution plans, which are due by July 01, 2021. The 2021 plans will be required to include core elements of a resolution plan, such as capital, liquidity, and recapitalization strategies, in addition to covering how each firm has integrated changes to, and lessons learned from, its response to the COVID-19 pandemic into its resolution planning process. This will be the first targeted resolution plan, a type of plan introduced in the revisions to the agencies' resolution plan rule finalized last year.
FED has published an indicative version of the letter that will be sent to firms in the context of the targeted resolution plans. The letter details the targeted information being requested, with focus on the Covered Company’s actions in response to events surrounding the COVID-19 pandemic. The Agencies intend to use the response to the stress caused by the COVID-19 to inform their assessment of the Covered Company’s resolution-related capabilities and infrastructure. Among other aspects, the letter specifies that the plan should discuss linkages between the Covered Company’s coronavirus response and resolution-related capabilities through December 31, 2020, along with the lessons learned, including whether such lessons have been, or will be, incorporated into the Covered Company’s resolution planning infrastructure.
Separately, the agencies recently completed a review of critical operations, which are operations at certain firms whose failure or discontinuance would threaten U.S. financial stability, and informed the firms of their findings. The agencies plan to complete another such review by July 2022 and this review will include a further, broader evaluation of the framework used to identify critical operations. Resolution plans, commonly known as living wills, must describe the firm's strategy for rapid and orderly resolution in bankruptcy in the event of material financial distress or failure of the firm.
Related Links
Keywords: Americas, US, Banking, Large Banks, Targeted Resolution Plans, Resolution Planning, Basel, COVID-19, Resolution Framework, US Agencies
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
FFIEC Issues Statement on Management of LIBOR TransitionRelated Articles
ESAs Issue Multiple Regulatory Updates for Financial Sector Entities
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
EBA Finalizes Methodology for Stress Tests, Issues Other Updates
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
OSFI Sets Out Work Priorities and Reporting Updates for Banks
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
APRA Finalizes Changes to Capital Framework, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
BIS Hub and Central Banks Conduct CBDC and DeFI Pilots
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)
EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation
The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)
