US Agencies (FDIC and FED) finalized guidance for the 2021 and subsequent resolution plan submissions by certain foreign banking organizations. The US Agencies also listed the bank names and provided information to these 15 listed domestic and foreign banks that are required to submit the next resolution plans by December 17, 2021. These targeted plans will be required to include core elements of a firm's resolution strategy as well as how each firm has integrated changes to, and lessons learned from, its response to the COVID-19 pandemic into its resolution planning process. Finally, the agencies also confirmed that weaknesses previously identified in the resolution plans for several large foreign banks—Barclays, Credit Suisse, Deutsche Bank, and UBS—have been remediated.
The guidance is intended to assist banks in developing their resolution plans, which are required to be submitted pursuant to Section 165(d) of the Dodd-Frank Act. 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 the agencies their plans for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure. The final guidance for resolution plan submissions intends to provide guidance to certain foreign banking organizations that are required to submit plans regarding development of their respective U.S. resolution strategies. Specifically, the guidance applies to any foreign banking organizations that is subject to Category II standards according to its combined U.S. operations in accordance with FED tailoring rule and that is required to form an intermediate holding company.
The final guidance describes the agencies’ expectations regarding a number of key vulnerabilities in plans for an orderly resolution under the U.S. Bankruptcy Code (that is, capital, liquidity, governance mechanisms, operational, branches, legal entity rationalization, and derivatives and trading activities). The guidance reflects a number of changes to the proposal, which was issued in March 2020, in response to comments received by the agencies and further analysis by the agencies. The agencies tailored their expectations around resolution capital and liquidity, derivatives and trading activity, and payment, clearing, and settlement activities. Other sections, such as group resolution plan, and sub-sections, such as management information systems, qualified financial contracts, and mapping of branch activities, were determined to be duplicative of the existing regulatory requirements and, therefore, have been eliminated from the guidance. The scope of the guidance was modified to generally cover foreign banks in Category II of the agencies' large bank regulatory framework. As a result, the guidance will apply to the 2021 resolution plans from Barclays, Credit Suisse, and Deutsche Bank, in addition to Mitsubishi UFJ Financial Group, Inc., for its full plans due in 2024.
- Press Release
- Guidance (PDF)
- List of Banks (PDF)
- Board Memo (PDF)
- Feedback Letter Template (PDF)
- Targeted Resolution Plan Letter Template (PDF)
Keywords: Americas, US, Banking, Foreign Banks, Dodd-Frank Act, G-SIB, Resolution Framework, Regulatory Capital, Resolution Planning, Basel, US Agencies
Previous ArticleSRB Publishes MREL Dashboard for Second Quarter of 2020
In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.
The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.
The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.
The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.
The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.
The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.
The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.