Agencies add one month to comment period on ‘living wills’ guidance for large foreign banks

And there may be more actions, delays, ahead for resolution planning process

You’ve now got a month’s more time to comment on proposed guidance for “living wills” submitted by certain large foreign banks, two of the federal banking agencies said Monday.

In a release, the Federal Deposit Insurance Corp. (FDIC) and the Federal Reserve said the new comment deadline is now June 4; it was scheduled to expire on May 5. The agencies said the extension will allow those interested in the topic to analyze issues in the proposal.

And this may not be the only comment period or other action related to living wills to be adjusted by the agencies. In a coda to Monday’s release, the agencies also stated that “in light of the challenges arising from the COVID-19 emergency, the agencies are reviewing and may adjust other upcoming deadlines associated with the resolution planning process.”

When proposed in March by the two agencies, the guidance affected the U.S. operations of only three foreign banking organizations (FBOs): Barclays, Credit Suisse, and Deutsche Bank. A fourth large foreign-based institution – UBS AG – is now supervised as part of the Fed’s large and foreign banking portfolio, according to the Fed.

As proposed in March, the guidance focuses on those FBOs that are triennial full filers and whose intermediate holding companies (U.S. IHCs) have a score of 250 or more under the second methodology (“method 2”) of the global systemically important bank (GSIB) surcharge framework. The guidance focuses on the agencies’ expectations around a firm’s derivatives and trading activities and payment, clearing, and settlement activities.

The agencies noted in March that for FBOs, resolution plans are focused on their U.S. subsidiaries and operations. The proposed guidance describes the agencies’ expectations regarding a number of key vulnerabilities in plans for a rapid and orderly resolution under the U.S. bankruptcy code (i.e., capital; liquidity; governance mechanisms; operational; legal entity rationalization and separability; and derivatives and trading activities).

Agencies extend comment period on updates to resolution plan guidance for large foreign banks