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
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
EP Reaches Agreement on Corporate Sustainability Reporting Directive
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
PRA Consults on Model Risk Management Principles for Banks
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
EC Regulation Amends Standards for Calculating Credit Risk Adjustments
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
HKMA Announces Launch of Data Repository on Sustainable Finance
The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
NGFS Report on Integration of G-Cubed Model into NGFS Scenarios
The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
