Citing time crunch with proposed rule change, regulators extend deadline on ‘living wills’ for nearly 100 foreign, domestic banks

FDIC board member reiterates opposition to rule change

Extension of deadlines to 2021 for filing the next round of “living wills” for nearly 100 large banks – mostly foreign, and some domestic – was announced Friday by federal banking regulators, as the agencies said the institutions needed more time to deal with rule changes proposed in April.

At the same time, the agencies also announced they are requesting more information for the living wills (known formally as resolution plans) from seven foreign banking organizations (FBOs) due in the next round of filings, now set for 2021 (rather than 2020). The agencies are requesting the information, they said, based on their reviews of the 2018 resolution plans.

And, in conjunction with those developments, a current board member of the federal insurer of banks Friday re-released his statement in opposition to the deadline extensions (which he first released in June).

The Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) said they were extending the deadlines for the filing of the next round of living wills for 82 foreign and 15 domestic banks to give the banks additional time to prepare their plans in light of resolution plan rule changes proposed by the agencies in April 2019. Further, the agencies said the extension “will mitigate uncertainty around the banks’ filing requirements while the agencies’ April proposal to revise the resolution plan rule remains pending.”

In the meantime, the agencies said, they are seeking more information from seven foreign banks (even though, they pointed out, the agencies had not identified shortcomings or deficiencies, defined as weaknesses the firm would be required to address, in the 2018 resolution plans of the 82 foreign banks). The banks are: HSBC Holdings plc; BNP Paribas; Royal Bank of Canada; Banco Bilbao Vizcaya Argentaria, S.A.; Bank of Montreal; Banco Santander, S.A.; and Toronto-Dominion Bank.

However, the agencies did announce they have extended the next full resolution plan submission date for four other very large foreign banks – Barclays PLC, Credit Suisse, Deutsche Bank AG, and UBS AG – to July 1, 2021. “These banks remain required to submit limited plans by July 1, 2020, describing how they have addressed the shortcomings identified in December 2018 and providing updates concerning certain resolution projects,” the agencies said.

In response to all of this, FDIC Board Member (and former chairman and vice chairman) Martin Gruenberg re-released his statement from June, noting his opposition to longer deadlines in filing the living wills. “I opposed the April 16 NPR (notice of proposed rulemaking) on the basis that it would significantly weaken the resolution plan framework developed since the financial crisis,” Gruenberg said in the June statement. “Among the objections were the unwarranted attenuation of resolution plan submissions or their elimination all together.”

At the Federal Reserve, all five board members voted to approve the extension announced Friday.

Agencies complete resolution plan evaluations and extend deadline for certain firms

Statement by Martin J. Gruenberg, Member, FDIC Board of Directors on the Feedback Letters Concerning December 2018 Title I Resolution Plan Submissions and Extension of Certain Plan Submission Deadlines (June, 2019)