Regulatory reporting: Revisions to Call Report and other related reports

The Federal Financial Institutions Examination Council (FFIEC) recently announced significant changes to bank regulatory reporting requirements (including the “Call Report”) that are expected to result in reduced reporting burden.  The changes originated in December 2014, when the FFIEC launched an initiative to reduce burdens associated with the Call Report. Since then, the FFIEC and its member agencies—the Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Consumer Financial Protection Bureau (CFPB), and National Credit Union Administration (NCUA)—have taken several actions to meet this goal, including the creation of a new streamlined Call Report for smaller institutions (FFIEC 051) that took effect with the March 31, 2017 report date.

The goals underlying this initiative coincide with a focus on simplifying, rationalizing, and recalibrating aspects of the regulatory framework, including regulatory reporting.  In support of the burden efforts, the Treasury Department urged regulators to “streamline current regulatory reporting requirements for all community financial institutions” by focusing their efforts on the applicability of each line item.1

Below is an overview of three recent developments with respect to the Call Report,2 the FFIEC 002 (Report of Assets and Liabilities of US Branches and Agencies of Foreign Banks) and FFIEC 002S (Report of Assets and Liabilities of a Non-US Branch that is Managed or Controlled by a US Branch of Agency of a Foreign (Non-US) Bank),3 and the FR Y-9C (Consolidated Financial Statements of Holding Companies), as well as the key takeaways for covered institutions.4

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FRB, FDIC issue feedback on 2017 US G-SIB resolution plans, find no deficiencies

On December 19, 2017, the Federal Reserve Board (FRB) and Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) announced credibility determinations and released firm-specific feedback on the 2017 resolution plans submitted by the eight US global systemically important banks (G-SIBs) under Section 165(d) of Dodd-Frank.1

Notably, the agencies announced that none of the plans had deficiencies,2 which reflects the “significant progress made in recent years.”

However, the agencies found that four of the plans had shortcomings3 related to derivatives and trading activities, separability, and legal entity rationalization (each plan had a single shortcoming).  In addition, the agencies identified four areas in which “more work needs to be done by all firms to continue to improve their resolvability”:

  1. intra-group liquidity,
  2. internal loss-absorbing capacity,
  3. derivatives, and
  4. payment, clearing, and settlement activities.

The agencies also expect firms to “remain vigilant in considering the resolution consequences of their day-to-day management decisions.” For a detailed analysis of the agencies feedback, click here.

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FRB, FDIC Release Public Sections of 2017 Resolution Plans of Eight US G-SIBs

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.

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