Posted by Irena Gecas-McCarthy, Advisory Principal, Deloitte & Touche LLP, Chris Spoth, Advisory Managing Director, Deloitte & Touche LLP, David Wright, Advisory Managing Director, Deloitte & Touche LLP, Monica Lalani, Advisory Principal, Deloitte & Touche LLP Ken Lamar, Independent Senior Advisor to Deloitte & Touche LLP, Richard Rosenthal, Advisory Senior Manager, Deloitte & Touche LLP, and Alex LePore, Advisory Senior Consultant, Deloitte & Touche LLP on August 30, 2016
Regulators have consistently communicated their high expectations for large foreign banking organizations (FBOs) operating in the US. Underlying these expectations is the assumption that FBOs will understand, appropriately respond to, and comply with regulations and guidance affecting the totality of their US operations, now in the forms of Intermediate Holding Companies (IHCs) and US branches and agencies. To have sufficient time to respond to, and integrate, new requirements, FBOs should gain an early understanding of new regulatory developments at the proposal stage, evaluate their impact on US operations, comment, and, when finalized, shift to an implementation mode that builds and integrates these new capabilities into business-as-usual operations.
Large FBOs, in particular, are already subject to recovery and resolution planning (RRP), liquidity reporting, liquidity stress testing, governance, and risk management requirements, among others, and are expected to holistically meet regulatory reporting, capital planning, and stress testing requirements. The Federal Reserve Board’s (FRB) final rule1 establishing enhanced prudential standards significantly raised the stakes for FBOs to effectively meet regulatory requirements.