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.
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Previous Article
FFIEC Issues Statement on Management of LIBOR TransitionRelated Articles
BIS Surveys Centrals Banks on Issuance of Digital Currencies
BIS published a report that presents the results of a survey among more than 60 central banks in late 2020 about their engagement in central bank digital currency (CBDC) work, their motivations, and their intentions regarding CBDC issuance.
OSFI Outlines Capital Treatment for COVID-19 Loan Guarantee Program
OSFI issued a letter to federally regulated deposit-taking institutions on the capital treatment of new loans to businesses through the Highly Affected Sectors Credit Availability Program (HASCAP).
BCBS Proposes to Amend Rules on Minimum Haircut Floors for SFTs
BCBS is consulting on two technical amendments to the rules on minimum haircut floors for securities financing transactions, or SFTs.
EC Consults on Crisis Management and Deposit Insurance Framework
EC launched a targeted consultation on the review of crisis management and deposit insurance framework in EU.
EIOPA Sets Out Principles for Liquidity Stress Test for Insurers
EIOPA published a paper that sets out the methodological principles of insurance stress testing with a focus on the liquidity component.
BIS Launches Euro Green Bond Fund for Central Banks
BIS launched a EUR-denominated, open-ended fund for green bond investments by central banks and official institutions, following the launch of the first BIS green bond fund denominated in USD in September 2019.
EBA Announces Stress Test Timeline; ECB Sets Up Climate Change Center
EBA announced that it will launch the 2021 EU-wide stress test exercise, with the publication of the macroeconomic scenarios on January 29, 2021.
BoE Discontinues Form CX on Capital Expenditure and Finance Leasing
BoE announced that the reporting entities are no longer required to report Form CX after the fourth quarter of 2020 reference period, with the last collection on January 29, 2021.
PRA Updates Q&A on Branch Return, Announces End Date of COVID Facility
PRA published Version 3 of the questions and answers (Q&A) on the Branch Return form, with this version superseding the version published in October 2020.
IAIS Consults on Application Paper on Supervision of Control Functions
IAIS is consulting on a draft application paper on the supervision of control functions.
