Amy S. Matsuo
National Leader, Regulatory Insights, KPMG US
Insight
Highlighting key changes to the resolution planning requirements proposed by the Federal Reserve and the FDIC.
Key points
- Proposed resolution planning changes are meant to maintain bank resiliency while tailoring requirements to different bank risk factors. The Federal Reserve Chair states agencies are not changing substantive review standards for the largest and most complex banks.
- Two new types of resolution plans with limited information requirements would be introduced alongside the current plan; the largest firms would be permitted to alternate between the “full” and more limited plan.
- For all covered firms, annual filing frequencies would be extended to either once every two or three years based on their size and risk profile.
The Federal Reserve and the FDIC have proposed to amend their joint rule implementing the resolution planning requirements of the Dodd-Frank Act’s Section 165, Enhanced supervision and prudential standards. The proposed rule would:
- Create a new framework for determining the U.S. and foreign banking organizations (domestic firms and FBOs) required to file a resolution plan.
- Raise from $50 billion to $250 billion, the minimum total consolidated asset threshold for general application of the resolution planning requirement, consistent with EGRRCPA.
Align the approach for applying the resolution planning requirement to the agencies’ proposed enhanced prudential standards frameworks for domestic banking organizations and FBOs, which would tailor requirements based on asset size and risk indicators.
The proposed framework would introduce three types of resolution plan requirements that would correspond to the four categories in the tailoring proposals. The three plan types would vary by filing frequency and required content.
Proposed Framework
| Standards Category | Size or Risk Indicators | Content and Frequency | Initial filing dates |
| Category I | U.S. GSIBs | Biennial Filer: Resolution plan filed every two years, alternating between a “full” plan and a “targeted” plan. |
July 1, 2019. |
| Category II | U.S. firms: ≥ $700b total consolidated assets or ≥ $100b total consolidated assets and ≥ $75b cross-jurisdictional activity FBOs: ≥ $700b combined U.S. assets or ≥ $100b combined U.S. assets and ≥ $75b cross-jurisdictional activity |
Triennial Filer: Resolution plan filed every three years, alternating between a “full” plan and a “targeted” plan. |
July 1, 2021. |
| Category III | U.S. firms: ≥ $250b and ≤700b total consolidated assets or ≥ $100b total consolidated assets and ≥ $75b nonbank assets, weighted short-term wholesale funding, or off-balance sheet exposure FBOs: ≥ $250b and ≤ $700b combined U.S. assets or ≥ $100b combined U.S. assets and ≥ $75b nonbank assets, weighted short-term wholesale funding, or off-balance sheet exposure |
Triennial Filer: Resolution plan filed every three years, alternating between a “full” plan and a “targeted” plan. |
July 1, 2021. |
| Category IV, Other FBOs | U.S. firms: No filing requirement for firms with ≥ $100b and ≤250b total consolidated assets that do not meet risk indicators thresholds FBOs: Subject to resolution planning, ≥ $250b global consolidated assets, not subject to Category II or Category III |
Triennial Reduced Filers: “Reduced” resolution plan filed every three years. |
July 1, 2022. |
All plan types would include a public section and information regarding actions taken to address any shortcomings or deficiencies identified by the agencies. In addition:
- “Full plans” would consist of a:
- Strategic analysis of the plan’s components.
- Description of the covered company’s corporate governance for resolution planning.
- Description of the range of specific actions the covered company proposes to take in resolution.
- Description of the covered company’s organizational structure, material entities, and interconnections and interdependencies.
- “Targeted plans” would include:
- Information that is required to be included in a full plan regarding capital, liquidity, and the covered company’s plan for executing any recapitalization contemplated in its resolution plan.
- Information about any areas of interest identified by the agencies and areas that have experienced material change since the previous plan filing.
- “Reduced content plans” would include:
- Material changes to a covered company’s plan since its previous filing.
- A description of changes to the strategic analysis that was presented in the previous plan that resulted from changes in law or regulation, feedback for the agencies, or material changes.
Note: The agencies are proposing to eliminate the current “tailored plan” category.
Notably, the regulators would retain the ability to require a full resolution plan from any firm at any point, including if material changes to a firm occurred during the cycle.
Comments are requested by June 21, 2019.
