regulatory, resolution planning guidance


Peeling back the resolution planning guidance

Summary of 2017 guidance

April 13, 2016, was a key milestone date for the evolution of resolution planning in the United States (US). For the first time, the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC) (collectively, the “agencies”) jointly determined that certain plans submitted by large banking organizations were “not credible or would not facilitate an orderly resolution” under the US Bankruptcy Code, a finding that requires the firms to revise their plans to demonstrate credibility. Institutions with resolution plans deemed not credible have until October 1, 2016, to address the identified deficiencies​.

Overview of announcements

The agencies more clearly described the criteria for evaluating resolution plans and more transparently described the rationale for individual firm resolution plan determinations. For the first time, the agencies disclosed high-level components of their Resolution Plan Assessment Framework used to evaluate and issue joint determinations on the 2015 resolution plans. In addition, they publicly released redacted versions of the feedback letters submitted to individual institutions. This approach underscores the significance the agencies place on resolution planning and their belief in the public’s right to know the degree of progress being made at systemically important institutions on ending “too big to fail.”

Significantly, as part of announcements, the agencies provided explicit guidance outlining expectations for the next full resolution plan submissions, which are due by July 1, 2017.1 This guidance further raises the bar and sets more specific standards that will affect all eight US global systemically important banks (G-SIBs)—not just those found to have deficiencies in their 2015 resolution plan. Avoiding deficiency determinations in July 2017 will require firms to develop a fulsome understanding of gaps and action plans across the areas described by the new guidance.

Read the full report for further information on the agencies' feedback as well our take on the key ingredients to success for 2017 resolution plans.

1. Guidance for 2017 §165(d) Annual Resolution Plan Submissions By Domestic Covered Companies that Submitted Resolution Plans in July 2015, Federal Deposit Insurance Corporation and Board of Governors of the Federal Reserve System (April 13, 2016), available at​

Key takeaways from April 13 FRB and FDIC resolution planning announcement

  1. Regulators have significantly raised their expectations: Regulators believe firms have fallen short strategically and operationally at overcoming resolvability issues
  2. Quick turnaround time to address deficiencies: Five firms have until October 1, 2016, to address the identified deficiencies
  3. Next full resolution plan submissions due by July 1, 2017: The agencies are dropping the July 2016 full plan submission deadline. All eight G-SIBs have a revised 2016 submission due by October 1, 2016. The scope of the required submission is tailored to the agencies’ resolution plan determination and firm-specific feedback letter
  4. The 2017 plan guidance should not be overlooked: The 2017 plan guidance highlights additional capabilities that are required by July 2017; firms should start determining their gaps and devise action plans to achieve the additional capabilities now required for an adequate plan and state of resolvability
  5. Increased transparency from agencies: The public documents identifying the criteria by which the agencies reviewed the plans and guidance on expectations for each of the critical areas—coupled with the actual feedback letters to the banks—have improved the transparency of the process. The guidance for the 2017 plan submissions further pressures banks to publicly demonstrate improvement
keys, regulatory

Overview of July 2017 resolution plan guidance

The 2017 Guidance is intended to be further clarification of previous guidance and specific feedback that was provided to institutions. The 2017 Guidance provides the basis for the next full plan submissions for the eight US G-SIBs, which is due by July 1, 2017.

The agencies also expect institutions to adhere to the 2013 guidance, the 2014 firm-specific feedback letters, and the 2015 firm-specific communications, except in instances where these have been superseded or supplemented with 2017 Guidance.

The 2017 Guidance includes 23 pages of additional expectations across the areas in which the agencies have identified key vulnerabilities with respect to resolution. The 2017 Guidance outlines expectations for addressing these key vulnerabilities, such as enhancing capabilities, requiring detailed analysis, and/or requiring optionality.

The 2017 Guidance further emphasizes the expectation that institutions have capabilities described in the FRB’s Supervision and Regulation (SR) Letter 14-11 and capabilities to execute its resolution strategy.

Although July 2017 is over a year away, the more detailed expectations outlined in the 2017 Guidance may cause challenges for institutions, which creates urgency for them to begin preparing now.

1. SR Letter 14-1, “Heightened Supervisory Expectations for Recovery and Resolution Preparedness for Certain Large Bank Holding Companies–Supplemental Guidance on Consolidated Supervision Framework for Large Financial Institutions” (Jan. 24, 2014), available at

2017 guidance areas of key vulnerabilities


  • Capital
  • Liquidity
  • Governance
  • Operational
    • Payment, clearing, and settlement
    • Collateral
    • Management information systems
    • Shared and outsourced services
    • Legal obstacles
  • Legal entity rationalization and separability
  • Derivatives and trading activities
  • Public section

These areas, with the exception of the Public section, are also highlighted as the areas the agencies evaluated as part of their Resolution Plan Assessment Framework​

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