FDIC finalizes new resolution filings for banks over $50B

The FDIC approved a final rule to require resolutions plans for banks with at least $100 billion in assets and “informational filings” for banks over $50 billion.

Details: Under the final rule:

• Banks with at least $100 billion must submit comprehensive resolution plans that meet enhanced standards to support the FDIC’s ability to undertake an efficient and effective resolution should such an institution fail.

• Banks between $50 billion and $100 billion must submit more limited informational filings, which do not include resolution strategies and related valuation information, to assist in their potential resolution.

• Banks between $50 billion and $100 billion are also exempt from submitting certain strategy-related content requirements regarding the institution’s franchise components.

• Most covered institutions must submit full resolution submissions every three years, though institutions affiliated with U.S. global systemically important banking organizations must provide submissions every two years.

Deadline: The final rule—which responds to the failures of Silicon Valley Bank and Signature Bank of New York last year—will take effect Oct. 1, 2024. The FDIC said the first submissions are expected next year.

ICBA Comments: In a comment letter to the FDIC last fall, ICBA said:

• It agrees with resolution planning for banks with at least $100 billion in assets, but banks between $50 billion and $100 billon should generally be exempt.

• Resolution requirements for banks over $100 billion are needed because the pool of potential acquirers is limited for banks of that size.

• It agrees the FDIC should use a bridge depository institution, or BDI, where possible so the agency could sell the resolved bank in pieces to multiple acquirers over time, limiting the propensity for bank failures to lead to large banks growing larger.

• BDIs or whole bank sales are more viable for banks between $50 billion and $100 billon, so they should be fully exempted from filing resolution plans or informational filings unless they engage in activities that are so complex that resolution options are limited.