The Federal Deposit Insurance Corporation & the FED today announced several resolution plan actions. Resolution plans, commonly known as living wills, must describe the company’s strategy for rapid & orderly resolution in bankruptcy in the event of material financial distress or failure of the company.

First, the agencies confirmed that weaknesses previously identified in the resolution plans for several large foreign banks—Barclays, Credit Suisse, Deutsche Bank, & UBS—have been remediated.

Second, the agencies finalized guidance for the resolution plans of certain large foreign banks. The final guidance modifies the proposed guidance, which was issued in March of this year, in several ways. The agencies tailored their expectations around resolution capital & liquidity, derivatives & trading activity, as well as payment, clearing, & settlement activities. The scope of the guidance was also 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, & Deutsche Bank, & also to MUFG for its full plan due in 2024.

& third, the agencies provided information for large foreign & domestic banks that will inform the content of their next resolution plans, which now are due December 17, 2021. In particular, these targeted plans will be required to include core elements of a firm’s resolution strategy—such as capital, liquidity, & recapitalization strategies—as well as how each firm has integrated changes to & lessons learned from its response to the coronavirus into its resolution planning process. The information applies to foreign & domestic banks in categories II & III of the large bank regulatory framework.

Last Update:

December 09, 2020