On July 5, 2017, the Federal Reserve Board (FRB) and Federal Deposit Insurance Corporation (FDIC) released the public sections of the 2017 resolution plans submitted by all eight US global systemically important banks (G-SIBs).1 The 2017 public sections are substantially longer than the 2015 public sections submitted in connection with the firms’ last full submissions—863 pages in 2017 compared to 520 pages in 2015—and contain significant new details about the G-SIBs’ completed and forthcoming enhancements to resolution planning capabilities to address regulatory concerns.
The 2017 plans were submitted after the FRB and FDIC (collectively, the “Agencies”) jointly determined that the 2015 plans submitted by five of the eight G-SIBs were “not credible or would not facilitate an order resolution under the Bankruptcy Code.”2 (After the firms submitted remediation plans, the Agencies jointly determined that the firms had adequately remediated the identified deficiencies.) The 2017 public sections make clear that the G-SIBs have benefitted from the Agencies’ increased transparency across the key resolution planning capabilities, as the institutions have demonstrated significant improvements in each of these areas.
Although the Agencies have not yet reviewed either the confidential or public portion of the 2017 plans, the findings related to the 2015 plans illustrate the heightened expectations with respect to resolution planning. If the Agencies determine that a plan is “not credible” and the firm does not remediate an identified deficiency, they may impose more stringent capital, leverage, or liquidity requirements, or restrictions on the firm’s growth, activities, or operations until it submits a plan that remediates the deficiency.
The next full plan submissions for all eight US G-SIBs are due by July 1, 2018.
For a more detailed analysis of the public sections, please click here.