‘Living wills’ requirements for large banks would be modified under proposal

Large banks – those with $100 billion or more in assets – would be required to submit their “living wills” every three years to the federal insurer of bank deposits, (rather than an annual one), under a proposal issued Friday by the agency making that change and others.

The Federal Deposit Insurance Corp. (FDIC) said its proposal on “living wills” (known more formally as resolution plans) preserves key content requirements that have helped the agency’s staff develop resolution strategies for banks and other insured depository institutions (IDIs) but exempts filers from other content requirements that it said “have been less useful or are obtainable through other supervisory channels.”

“On a case-by-case basis, the FDIC also plans to exempt filers from certain content requirements based on its evaluation of how useful or material the information would be in planning to resolve each IDI,” the agency said in a release.

“The modified approach also places greater focus on engagement and capabilities testing by FDIC staff,” the agency asserted. “This structured, periodic engagement will be used to seek further understanding of content submitted in the plan and to assess a filer’s ability to produce relevant information.”

The FDIC said each bank covered under the statement will receive a letter from the FDIC that specifies exempted plan content and the due date for the next filing. The plans will be submitted in two groups, the agency said, with the first group consisting of IDIs whose top tier parent company is not a U.S. global systemically important bank or a category II banking organization.

The second group, the agency said, will be all other IDIs with $100 billion or more in total assets.

For banks with less than $100 billion in total assets, the moratorium on submission of IDI plans announced in November 2018 remains in effect, the agency said.

FDIC Outlines Modified Approach for Insured Depository Institution Resolution Planning Rule