Credit Suisse, BNP Paribas flagged for ‘deficiencies,’ ‘shortcomings’ in living will submissions made in 2021

Shortcomings in resolution plans (or “living wills”) for two very large banks were identified by two federal bank regulators, with the agencies calling on the banks to take actions (in one case by May 31, 2023), the regulators said late Friday.

Credit Suisse AG and BNP Paribas were both flagged by the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) for the shortcomings. The release was prompted by the results of their joint review of the living wills of 71 domestic and foreign banking organizations, results of which were released late last week.

For Credit Suisse AG, the agencies said they identified two deficiencies in the bank’s 2021 plan submission. The deficiencies, the agencies said, pertain to resolution planning cash flow forecasting capabilities and governance for their U.S. operations. “As detailed in a feedback letter, the agencies are requiring the firm to resubmit a revised resolution plan for its U.S. operations by May 31, 2023, that demonstrates the governance weaknesses have been addressed and in its next plan due by July 2024, that demonstrates the cash flow forecasting weaknesses have been remediated.”

For BNP Paribas, the agencies said they identified a shortcoming in the bank’s plan related to the continuity in resolution of the bank’s securities repurchase agreement activity for their U.S. operations. The agencies said a feedback letter to the firm described the specific weaknesses resulting in the shortcoming and the actions required by the agencies; no other details were provided in the release.

“The agencies did not identify shortcomings or deficiencies in the plans from the other banking organizations,” the agencies stated. “However, as previously jointly announced in September, the agencies anticipate issuing guidance to help certain large banking organizations further develop their resolution plans.”

Agencies announce results of resolution plan review for certain domestic and foreign banks