Agencies advise two banking firms the time has come for updated ‘living wills’

Two large banking organizations in New Jersey and Rhode Island were provided “updated expectations” for their next “living wills” from the nation’s central bank and federal deposit insurer Thursday.

The Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) communicated their updated expectations for the next resolution plans of domestic banks CIT and Citizens Financial Group, respectively of Livingston, N.J., and Providence, R.I. The former holds $40.7 billion in assets, and the latter $157.7 billion in assets.

According the two agencies, the “living wills” expectations are similar to those communicated to 16 domestic firms in March 2017. The plans are due to the Fed and FDIC Dec. 31.

“The agencies are tailoring their expectations for the firms by limiting the amount of information the firms are expected to submit in their next plans,” the agencies said, both issuing releases. “As with the expectations issued to the 16 domestic firms in March 2017, the agencies are requiring the firms to focus on progress made in addressing service disruptions and firm employee departures during a potential resolution.”

The two agencies also explained that “living wills” describe the company’s strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company.

Both the Fed and FDIC said that, in reviewing the two firms’ 2016 resolution plans, they did not identify deficiencies or shortcomings with the two firms, which the agencies said “are weaknesses that the agencies would have required the firms to address in a resubmission or the next regular submission.”

Federal Reserve release: Agencies communicate updated expectations for next resolution plans of two domestic banks

Feedback letter, CIT Group Inc.

Feedback letter, Citizens Financial Group