Fifteen large banks will have an additional eight months to prepare their next resolution plans while federal regulators
The Federal Reserve announced Wednesday that the bank holding companies, which were previously due to submit new
The group includes Capital One Financial, Northern Trust, PNC Financial Services Group, Truist Financial, U.S. Bancorp, Bank of Montreal, Barclays, BNP Paribas, Deutsche Bank, Mitsubishi UFJ Financial Group, Mizuho Financial Group, Royal Bank of Canada, Sumitomo Mitsui Financial Group, Toronto-Dominion Bank and UBS Group AG.
A resolution plan, also known as a living will, details a bank's strategy for handling a bankruptcy or dissolution in the face of failure or deep financial distress in a "rapid and orderly" fashion. The Dodd-Frank Act of 2010 established a resolution plan requirement for certain bank holding companies.
In August, the Fed and Federal Deposit Insurance Corp. proposed a joint rule that would update these standards by setting out criteria that apply to specific risks within individual banks. The intent of the reform is for banks to be better prepared to handle deposit runs and other issues without jeopardizing the Deposit Insurance Fund.
The proposal also calls for subjecting all banks with at least $100 billion of assets to stricter requirements, a provision that Fed Gov. Michelle Bowman said would run afoul of the Fed's commitment to tailor regulations in such a way that the most stringent requirements are reserved for the biggest and riskiest banks.
When the proposal was put forth in August, Bowman called for a delay in issuing guidance on resolution planning standards until a final rule has been adopted. On Wednesday, Bowman said she supported the board's decision to extend the deadline on the 15 banks. The institutions all fall under Categories II and III under the Fed's tailoring framework, meaning they have more than $250 billion of assets but do not meet the "global systemically important bank" threshold.
In a statement, Bowman noted that the current resolution plan rule requires the Fed and FDIC to give banks at least a year's notice of a new deadline to submit a living will. She added that banks should have more time if the new rules are not finalized before the end of March of this year.
"Because the resolution plan rule contemplates that firms would have at least 12 months to prepare and submit a resolution plan, I expect that the board would provide another extension to Category II and Category III firms if the board and FDIC do not finalize their proposed guidance before March 31, 2024, so that the firms would have 12 months from the date of any finalized guidance to submit their next resolution plan," she said.
The comment period on the proposal closed on Tuesday. Regulators will consider the public feedback and incorporate it into a final rule, a process that often takes several months.
