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Resolution Authority

Monday, March 27, 2017

Regulators Clear Living Wills for Regional, Card Banks

The FDIC and Federal Reserve have announced that they had reviewed resolution plans submitted in December 2015 by 16 regional and credit card banks and that none were found “not credible” or inadequate to facilitate an orderly resolution under the Bankruptcy Code, the statutory standard under the Dodd-Frank Act.

So-called living wills submitted for fifteen of the banking firms – American Express, Ally Financial, BB&T, Capital One, Comerica, Discover, Fifth Third, Huntington, KeyCorp, M&T Bank, PNC, Regions, SunTrust, U.S. Bancorp and Zions Bancorporation – had no shortcomings, according to regulators. As a result, these institutions will be able to submit less information as part of the resolution plans due in December 2017. The agencies identified shortcomings in the plan submitted by Northern Trust Corporation that the company must address in its next filing.

Meanwhile, the agencies provided feedback to the U.S. affiliates of four overseas banking firms – Barclays, Credit Suisse, Deutsche Bank and UBS – to address vulnerabilities associated with governance, capital and liquidity. All four have “significantly restructur[ed]” their U.S. operations to comply with Dodd-Frank, the agencies said. The four firms will have until July 2018 to submit revised living wills.

The resolution plan process – which applies to U.S. bank holding companies with assets of more than $50 billion, nonbanks designated as systemically important by the Financial Stability Oversight Council and large foreign banks with U.S. operations – requires these large institutions to describe their strategy for a rapid and orderly wind-down in the event of stress. Planning requirements are tiered based on a firm’s level of complexity.

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