On March 24, 2017, the Federal Reserve Board and the Federal Deposit Insurance Corporation (the “Agencies”) jointly announced that they had completed their evaluation of the resolution plans submitted by 16 domestic banks, primarily regional banks, in December 2015, as required by the Dodd-Frank Act. The Agencies did not determine that any of the  16 plans were incomplete or not credible but identified several shortcomings in one bank’s plan around liquidity, the transfer of uninsured and foreign deposits, and shared services, which must be satisfactorily addressed in the bank’s December 2017 plan. The remaining 15 banks will be entitled to submit plans with more limited information in December 2017.

The letters provided by the Agencies to the 15 banks primarily discussed the next resolution plans to be submitted later this year in December. While the Agencies tailored the letters to each institution, identifying particular areas for improvement, the letters have common elements.  Each plan may be shorter: the executive summary and the strategic analysis may take the form of updates to the 2015 plan, and the plan may incorporate unchanged parts of the 2015 plan by reference. Each firm should assume that the severely adverse scenario for the first quarter of 2017 will be the prevailing economic environment at the time of the firm’s hypothetical failure and throughout the resolution process. The firm may, however, find it appropriate to address parts of the baseline and adverse scenarios. The next plan must include pro forma financial statements for each material entity at “key junctures” in the execution of the resolution strategy.

The Agencies also issued guidance to four foreign banks that also submitted resolutions plans focused on their U.S. operations. The Agencies’ guidance focused on helping these foreign banks improve their resolution plans, and to reflect the formation of intermediate holding companies by these banks and key vulnerabilities related to capital, liquidity and corporate governance. The guidance also covers several operational matters, including access to payment, clearing, and settlement mechanisms, managing, valuing, and identifying collateral, management information systems, shared and outsourced services, and qualified financial contracts. The guidance advises the FBOs to align and separate their U.S. subsidiaries to support an efficient resolution and to streamline the process for selling them, if necessary. The Agencies extended the due date for these foreign firms to submit their next resolution plans by one year to July 2018.