US Agencies Announce Results of Assessment of Bank Resolution Plans
FDIC and FED (the US Agencies) announced their assessment of the resolution plans of the largest and most complex domestic banks. The Agencies did not find any deficiencies or weaknesses that could result in additional prudential requirements for these banks, if not corrected. However, plans from six of the eight banks had shortcomings or weaknesses that raise questions about the feasibility of the plans, but these weaknesses are not severe enough to qualify as a deficiency. The plans to address the shortcomings are due to the agencies by March 31, 2020.
Resolution plans, commonly known as living wills, describe a bank's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure. In the plans of Bank of America, Bank of New York Mellon, Citigroup, Morgan Stanley, State Street, and Wells Fargo, the Agencies found shortcomings related to the ability of the firms to reliably produce, in stressed conditions, data needed to execute their resolution strategy. Examples include measures of capital and liquidity at relevant subsidiaries. The agencies did not find shortcomings in the plans from Goldman Sachs and J.P. Morgan Chase. The agencies also announced that Bank of America, Goldman Sachs, Morgan Stanley, and Wells Fargo successfully addressed prior shortcomings identified by the agencies in their December 2017 resolution plan review.
The feedback letters have been generated for the assessed banks. For the six banks whose plans have shortcomings, the letter details the specific weaknesses and the actions required. Overall, the letters note that each firm made significant progress in enhancing its resolvability and developing resolution-related capabilities but all firms will need to continue to make progress in certain areas. The feedback letters confirm that the Agencies expect to focus on testing the resolution capabilities of the firms when reviewing their next plans.
At present, the largest, most complex FED-supervised banking organizations are required to file resolution plans by July 01 of each year. All other organizations that are supervised by FED and are subject to the resolution planning rule are required to file by December 31 of each year.
Related Links
Keywords: Americas, US, Banking, Resolution Plans, Large Banks, Systemic Risk, Living Wills, US Agencies
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
PRA Publishes Final Policy on PRA110 Reporting Frequency ThresholdRelated 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.
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.
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.
UK Authorities Issue Regulatory and Reporting Updates for Banks
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
BCBS Issues Climate Risk Principles while HKMA Expresses Its Support
The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.
