The OCC requests comments on a proposed rulemaking to ensure that large banks are adequately prepared and have developed a plan to respond to the financial effects of severe stress, particularly in light of the contagion effects and systemic risks they may pose. https://lnkd.in/eE--hjTD
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In what is now the third major announcement in the bank recovery and resolution planning space in as many days, the OCC has proposed for comment, revisions to its recovery planning rule that would significantly expand the universe of banks within its scope. Last week the FDIC approved a new final CIDI resolution plan rule applicable to banks with $100billion or more in assets and the FDIC/FRB jointly released public feedback letters for the 8 U.S. G-SIB resolution plans submitted in 2023 where several new shortcomings were identified for some filers and new areas of focus specified for their 2025 submissions. There’s a lot to digest across all three announcements but here are a few of my favorites, ranked from the benign to the truly cerebral: ➡ The final CIDI rule adopts several significant suggestions made by the industry in the notice and comment process, including the much-needed harmonization of key defined terms across resolution planning rules in a space that risks cumbersome fragmentation. ➡ The agencies have long foreshadowed their move away from a plan-based review to one focused on “capabilities” and the need to test them. All three announcements reinforce that view and impose onerous requirement to develop not only testing programs, but comprehensive assurance frameworks over RRP capabilities. Bonus points under the OCC proposal if you can integrate RRP into various other resiliency and testing programs associated with a bank’s multiple-line-of-defense risk management framework. ➡ Notwithstanding the 15 years that have passed since Lehman Bros’ failure, the interconnection between derivatives and insolvency continues to remain a key focal point. Despite the hundreds of pages of post-financial crisis rules and protocols focused on addressing this issue (Part 148 and Part 371 QFC recordkeeping; QFC stay; multiple ISDA resolution stay protocols and numerous country-specific annexes, initial and variation margin rules, and the move toward swap clearing to name but a few . . .), the focus here continues to surprise me to the point I fear it may be misplaced ➡ The preamble to the final CIDI rule contains a handful of helpful hints into how various aspects of a filer’s submission could be evaluated (don’t forget to quantify items you are asked to ‘identify’ as opposed to merely ‘describe,’ in which case a qualitative description may suffice) but most interesting is its discussion of franchise components, the ‘timeliness’ by which they must be marketable, and the related-but-different group of divestiture options than can comprise a multiple acquirer strategy. A lot of inside baseball on this one, I know, but it's been THE hot topic around the water cooler. And there’s still more to come in the space. The FRB and FDIC are still working through the related long-term debt requirements and the updated guidance for holding company resolution plans applicable to certain non-G-SIB large banks and foreign banking organizations.
The OCC requests comments on a proposed rulemaking to ensure that large banks are adequately prepared and have developed a plan to respond to the financial effects of severe stress, particularly in light of the contagion effects and systemic risks they may pose. https://lnkd.in/eE--hjTD
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On the heels of the FDIC's final IDI rule last week, the OCC has issued a proposal (with a 30-day comment period) on recovery plan Guidelines (not to be confused with (non-enforceable) "guidance"). Arguably, these plans are even more important to get right -- their aim is to avoid resolution. Think vitamin, not painkiller. Or swerving deftly to avoid a horrific end. 1) As expected, more banks (within $100B-$250) would be covered. Hard to resist "Back to the Future" here. Others between $50B-$100B could be covered too depending on how the reservation of rights is exercised. 2) Speaking of reservations, did you know the OCC has historically had the discretion to request recovery plans of institutions between $100B-$250B where heightened risk is present? (The same is true of the Fed for Dodd-Frank plans). Last year's bank failures are noted as a driving need for the proposal. But note the OCC might have exercised its discretion (given known supervisory lapses, interest rate risk issues, and elevated amounts of uninsured deposits). No one knows if there would have been a different result. 3) The new testing standard is a common theme. One hopes for a coordinated, interagency effort on all forms of recovery and resolution plan testing (and joint agreement on the agency response to go along with that). It is incredibly time-consuming work, and more could be done to better define "non-financial" risk. Look for lots more "in the weeds" stuff in public comments.
The OCC requests comments on a proposed rulemaking to ensure that large banks are adequately prepared and have developed a plan to respond to the financial effects of severe stress, particularly in light of the contagion effects and systemic risks they may pose. https://lnkd.in/eE--hjTD
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Read this article from Forvis Mazars to learn about proposed updates to the Basel III endgame and how banks can navigate compliance: https://bit.ly/3XDG3Sv
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The FDIC’s recent enforcement actions focus on banks to remain vigilant and adaptive in their compliance practices, emphasizing the need to stay ahead of regulatory curves and adapt to the dynamic financial environment to ensure compliance and maintain market integrity. To learn more about the most recent enforcements with analysis DOWNLOAD OUR ENFORCEMENT ACTIONS eBook here: https://lnkd.in/gP_eB3Q #FDIC #Enforcements #compliance
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Read this article from Forvis Mazars to learn about proposed updates to the Basel III endgame and how banks can navigate compliance: https://bit.ly/3XDG3Sv
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Read this article from Forvis Mazars to learn about proposed updates to the Basel III endgame and how banks can navigate compliance: https://bit.ly/3XDG3Sv
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Read this article from Forvis Mazars to learn about proposed updates to the Basel III endgame and how banks can navigate compliance: https://bit.ly/3XDG3Sv
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Read this article from Forvis Mazars to learn about proposed updates to the Basel III endgame and how banks can navigate compliance: https://bit.ly/3XDG3Sv
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This week we learned that U.S. regulators may re-propose the Basel III Endgame rules. While we await details, Forum CEO Kevin Fromer shared initial thoughts, highlighting the continued uncertainty about the need to raise U.S. capital requirements given the demonstrated strength of the largest U.S. banks and the apparent lack of harmonization with foreign regulators. Fromer also discussed the process for a re-proposal, the need for sufficient analysis, and the importance of addressing how the agencies treat capital for trading, market making and underwriting. Read more: https://zurl.co/aCNo
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The G20/OECD High-Level Principles on Financial Consumer Protection are the leading international standard for comprehensive Consumer Protection frameworks. The Principles set out the foundations for a functioning financial services market which serves the interest of consumers. Yvonne Kelleher and our Risk Consulting team explain the significance of the Principles, as well as their influence on the Central Bank’s revised Consumer Protection Code in this article. https://lnkd.in/eTTTcg_b
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