US Agencies Provide Large Banks Information for Next Resolution Plans
US Agencies (FDIC and FED) are providing information to the eight largest and most complex domestic banking organizations to guide their next resolution plans, which are due by July 01, 2021. The 2021 plans will be required to include core elements of a resolution plan, such as capital, liquidity, and recapitalization strategies, in addition to covering how each firm has integrated changes to, and lessons learned from, its response to the COVID-19 pandemic into its resolution planning process. This will be the first targeted resolution plan, a type of plan introduced in the revisions to the agencies' resolution plan rule finalized last year.
FED has published an indicative version of the letter that will be sent to firms in the context of the targeted resolution plans. The letter details the targeted information being requested, with focus on the Covered Company’s actions in response to events surrounding the COVID-19 pandemic. The Agencies intend to use the response to the stress caused by the COVID-19 to inform their assessment of the Covered Company’s resolution-related capabilities and infrastructure. Among other aspects, the letter specifies that the plan should discuss linkages between the Covered Company’s coronavirus response and resolution-related capabilities through December 31, 2020, along with the lessons learned, including whether such lessons have been, or will be, incorporated into the Covered Company’s resolution planning infrastructure.
Separately, the agencies recently completed a review of critical operations, which are operations at certain firms whose failure or discontinuance would threaten U.S. financial stability, and informed the firms of their findings. The agencies plan to complete another such review by July 2022 and this review will include a further, broader evaluation of the framework used to identify critical operations. Resolution plans, commonly known as living wills, must describe the firm's strategy for rapid and orderly resolution in bankruptcy in the event of material financial distress or failure of the firm.
Related Links
Keywords: Americas, US, Banking, Large Banks, Targeted Resolution Plans, Resolution Planning, Basel, COVID-19, Resolution Framework, US Agencies
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
FFIEC Issues Statement on Management of LIBOR TransitionRelated Articles
EC Publishes Regulations Supplementing Investment Firms Directive
The European Commission (EC) published three Delegated Regulations (2021/2153, 2021/2154, and 2021/2155) to supplement the Investment Firms Directive (IFD or Directive 2019/2034).
FSB Report Examines Trends in Non-Bank Intermediation in Americas
The Financial Stability Board (FSB) published a report that presents results of the sixth non-bank financial intermediation monitoring exercise in the Americas.
BIS Discusses Regulatory Approach for Non-Bank Intermediation
The Bank for International Settlements (BIS) published the December issue of the Quarterly Review, which analyzes the non-bank financial intermediation mechanisms that could undermine financial stability.
BoE Calls for Vendor Input for Data Collection Transformation Program
The Bank of England (BoE) opened the Alternative Liquidity Facility, or ALF, for deposits from the participating UK-based Islamic banks for the first time.
APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
EBA Proposes Standards on Interest Rate Risk in the Banking Book
The European Banking Authority (EBA) launched three consultations on technical aspects of the revised framework capturing interest rate risks for banking book (IRRBB) positions, with the comment period ending on April 04, 2022.
EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
EBA Sets Out List of Banks for Mandatory Basel III Monitoring Exercise
The European Banking Authority (EBA) published the sample of banks for the mandatory Basel III monitoring exercise, which will refer to the December 2021 data.
FED Revises Complex Institution Liquidity Monitoring Report for Banks
The Board of Governors of the Federal Reserve System (FED) is adopting a proposal to revise and extend for three years the Complex Institution Liquidity Monitoring Report (FR 2052a) for banks.
FSB Sets Out Good Practices for Crisis Management Groups
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.
