US Agencies Adopt Final Guidance for Resolution Plan Submissions
The US Agencies (FED and FDIC) are adopting the final guidance for the 2019 and subsequent resolution plan submissions by the eight largest, complex U.S. banking organizations. The agencies also announced that the resolution plans of four foreign-based banks had weaknesses, but did not have "deficiencies," which are weaknesses severe enough to result in additional prudential requirements if not corrected. The agencies sent feedback letters to each firm detailing the shortcomings and specific actions that can be taken to address them. The firms must address the shortcomings in their next resolution plans, which are due July 01, 2020, and are expected to implement certain resolution projects in the interim.
The agencies determined that the plans of the four firms—Barclays, Credit Suisse, Deutsche Bank, and UBS—have "shortcomings," which are less severe weaknesses that require additional work in their next plan. These shortcomings in the four firms' plans include weaknesses in how each firm communicates and coordinates between its U.S. operations and its foreign parent in stress. Credit Suisse also had a shortcoming related to estimating the liquidity needs of its U.S. intermediate holding company in a resolution. For foreign banking organizations, resolution plans are focused on their U.S. operations; however, the agencies acknowledge that the preferred outcome for these four foreign-based banks is a successful home country resolution using a single point of entry resolution strategy. Since the 2007 financial crisis, the four firms have improved their resolvability by significantly reducing the size and risk profiles of their U.S. operations and increasing their capital and liquidity levels. The resolvability of firms will change, as both the firms and markets continue to evolve. The agencies expect the firms to remain vigilant in assessing their resolvability.
The finalized resolution plan guidance for the eight largest and most complex domestic banking organizations is largely similar to the proposal issued in June 2018 and provides additional information for the firms regarding their resolution planning capabilities in areas such as capital, liquidity, and payment, clearing, and settlement activities. While the capital and liquidity sections of the final guidance remain largely unchanged from the proposed guidance and the guidance from 2016, the agencies intend to provide additional information on resolution liquidity and internal loss absorbing capacity in the future.
Related Links
- Joint Press Release
- Final Guidance (PDF)
- Letter to Barclays (PDF)
- Letter to Credit Suisse (PDF)
- Letter to Deutsche Bank (PDF)
- Letter to UBS (PDF)
Keywords: Americas, US, Banking, Resolution Plans, Guidance, Dodd Frank Act, FED
Previous Article
BCBS Report Examines Cyber Resilience Practices Across JurisdictionsRelated Articles
OSFI Consults on Revisions to BCAR and Leverage Requirements Returns
OSFI proposed revisions to the Basel Capital Adequacy Reporting (BCAR) and leverage requirements returns for the 2023 reporting, with the comment period ending on July 09, 2021.
EBA Seeks Views on Revisions to Nonperforming Loan Data Templates
EBA published a discussion paper on review of the standardized nonperforming loans (NPL) transaction data templates, along with the proposed revised NPL data templates.
Bundesbank Updates Requirements Documentation for AnaCredit Reporting
Bundesbank updated AnaCredit reporting requirements for banks, with reference to the Notice 8001/2020.
CBUAE Issues Regulation for Low-Risk Specialized Banks
CBUAE has issued a regulation that introduces the licensing and supervision framework for low-risk, specialized banks.
APRA Proposes Guidance to Support Prudential Standard on Remuneration
APRA is consulting on CPG 511—the draft Prudential Practice Guide on remuneration for banks, insurers, and superannuation licensees—with the comment period ending on July 23, 2021.
MAS Announces Grant Scheme to Spur Adoption of Regtech Solutions
MAS announced a new RegTech grant scheme and an enhancement of the Digital Acceleration Grant (DAG) scheme to accelerate technology adoption in the financial sector.
PRA Review Finds Most Banks Compliant with Regulatory Reporting Rules
PRA published a letter that sets out findings from the 2020 Internal Audit Review of the Collections function of a sample of non-systemic banks and building societies.
EIOPA Launches Consultation on Interbank Offered Rate Transitions
EIOPA launched a consultation on the Interbank Offered Rate (IBOR) transitions, in context of the EU Benchmarks Regulation.
IFRS Issues Proposals Related to New Sustainability Standards Board
The Trustees of the IFRS Foundation proposed amendments to the Constitution of the IFRS Foundation to accommodate the potential formation of the new International Sustainability Standards Board within the governance structure of the organization.
BCB Amends Rules on Open Banking and Proposes ESG Disclosure Rules
BCB amended the resolution that establishes technical requirements and operational procedures for the implementation of open banking in Brazil, with the amended resolution entering into force on its publication date.
