US Agencies Propose Resolution Plan Submission Guide for Foreign Banks

Section 165(d) of the Dodd-Frank Act and the jointly issued implementing regulation require certain financial companies, including certain foreign-based firms, to report periodically, to FED and FDIC, their plans for rapid and orderly resolution, under the U.S. Bankruptcy Code, in the event of material financial distress or failure. The scope of application of the proposed guidance would be foreign banking organizations that are triennial full filers and whose intermediate holding companies have a score of 250 or more under the second methodology (method 2) of the global systemically important bank (G-SIB) surcharge framework. The proposed guidance also updates certain aspects of prior guidance based, in part, on the agencies' review of certain foreign banking organizations' most recent resolution plan submissions and changes to the resolution planning rule. 

The proposed guidance begins with a description of the proposed scoping methodology and is then organized into eight substantive areas, consistent with the 2018 foreign banking organization guidance. These areas are capital, liquidity, governance mechanisms, operational, branches, group resolution plan, legal entity rationalization and separability, and derivatives and trading activities. Each substantive area is important to firms in implementing their U.S. resolution strategy, as each plays a part in helping to ensure that the firms can be resolved in a rapid and orderly manner. The proposed guidance would describe the agencies' expectations for each of these areas. 

The proposal would update the payment, clearing, and settlement activities and derivatives and trading activities areas of the 2018 foreign banking organization guidance to reflect the agencies' review of certain Specified foreign banking organizations' 2018 resolution plans and revisions contained in the 2019 domestic guidance. It would also make minor clarifications to certain areas of the 2018 foreign banking organization guidance in light of the 2019 revisions. In general, the proposed revisions to the guidance are intended to streamline the firms' submissions and to provide additional clarity. In addition, the proposed guidance would consolidate all guidance applicable to the specified foreign banking organizations into a single document, which would provide the public with one source of applicable guidance to refer to. 

Related Link: Federal Register Notice

Comment Due Date: May 05, 2020

Keywords: Americas, US, Banking, Resolution Plan, Foreign Banks, US Bankruptcy Code, Dodd-Frank Act, G-SIBs, Resolution Framework, US Agencies