Fed, FDIC post public sections of 2023 resolution plans for 8 big US banks

The Federal Reserve Board and the Federal Deposit Insurance Corp. released the public sections of resolution plans submitted by eight big US banks under section 165(d) of the Dodd-Frank Act.

Eight large US banks — Citigroup Inc., the Bank of New York Mellon Corp., Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corp. and Wells Fargo & Co. — submitted the resolutions July 1.

Nonbank financial companies and bank holding companies with total consolidated assets of $250 billion or more periodically submit these resolution plans to the FDIC, the Federal Reserve Board and the Financial Stability Oversight Council, as per the act, as amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

The plans must detail the firms' strategies for "rapid and orderly" resolution under the US Bankruptcy Code should they face material financial distress or failure.

The companies detailed their strategies in key areas of resolution planning preparedness, including capital and liquidity, governance mechanisms and operational capabilities. The banks also provided responses to supervisory feedback on the 2021 targeted resolution plans.

Citi said that, since the previous submission in 2021, it has enhanced its resolution forecasting capabilities, enhanced operational efficiency by divesting seven of the 14 consumer businesses it plans to exit, tested its capabilities through tabletop simulations and business-as-usual activities, and showcased operational resilience capabilities.

State Street also increased both the frequency and complexity of its simulations and tabletop exercises since the 2021 targeted filing. The bank formalized its existing recovery and resolution planning testing program this year, creating a capabilities assurance framework that "clearly articulates the scope, responsibilities and frequency of resolution capabilities testing."

JPMorgan's resolution plan addressed the impact of its First Republic Bank acquisition. The company expects to record an estimated $2.6 billion posttax bargain purchase gain in connection with the acquisition, and approximately $2 billion of posttax restructuring costs over the course of 2023 and 2024, according to the filing.