Agencies – Resolution Plan Submissions of Certain Foreign-Based Covered Companies

December 22, 2020 – The Agencies are adopting this final guidance for the 2021 and subsequent resolution plan submissions by certain foreign banking organizations (FBOs). The final guidance is meant to assist these firms in developing their resolution plans, which are required to be submitted pursuant to Section 165(d) of the Dodd-Frank Act. The final guidance reflects a number of changes to the proposal in response to comments received by the agencies and further analysis by the agencies.

The scope of application of the final guidance is FBOs that are Category II firms according to their combined U.S. operations under the FRB’s tailoring rule and are required to have a U.S. intermediate holding company (IHC) under the FRB’s Regulation YY (the Specified FBOs) as published in 84 FR 59032 (November 1, 2019). In addition to the three firms (Barclays PLC, Credit Suisse Group AG, and Deutsche Bank AG (the Proposed FBOs) that would have been within the scope of application under the methodology utilized in the proposal, one additional firm, Mitsubishi UFJ Financial Group, Inc. (MUFG), is within the scope for application of the final guidance at the time of its issuance. Consequently, MUFG will have a transition period to consider the application of the final guidance to its resolution plan submission, as further described below.

The final guidance describes the agencies’ expectations regarding a number of key vulnerabilities in plans for an orderly resolution under the U.S. Bankruptcy Code (i.e., capital, liquidity, governance mechanisms, operational, branches, legal entity rationalization, and derivatives and trading activities). The final guidance modifies and clarifies certain aspects of the proposed guidance based on the agencies’ consideration of comments to the proposal, additional analysis, and further assessment of the business and risk profiles of the U.S. operations of large and complex FBOs.

The final guidance is available on December 22, 2020.

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