US Agencies Adopt Final Guidance for Resolution Plan Submissions

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