USA Trends and Developments Contributed by: David Sewell, Alison Hashmall and Nariné Atamian, Freshfields
ing the plan credible; instead, the IDI Rule provides staff with a third option – to identify “significant findings”, which are weaknesses or gaps that raise questions about the cred - ibility of a resolution submission but do not rise to the level of a material weakness. • Notice of extraordinary event rather than material change: The IDI Rule requires 45 days’ notice of an “extraordinary event”, rather than of a “material change”, setting a higher bar for events significant enough to require notice to the FDIC mid-cycle (such as any material merger, acquisition or disposi - tion of assets, or fundamental change to the CIDI’s organisational structure, core business lines, size, or complexity). Final guidance on 165(d) Rule resolution plans On 15 August 2024, the FDIC and Federal Reserve Board (FRB) jointly approved final reso - lution planning guidance on requirements under the 165(d) Rule and implementing rules applica - ble to many large foreign and domestic banking organisations (together, the “165(d) Plan Guid - ance”). The 165(d) Plan Guidance is intended to clarify the agencies’ expectations with respect to key elements of resolution plans, including on the topics of capital, liquidity, governance over - sight and mechanisms, operational capabilities and legal entity rationalisation and separability. The 165(d) Plan Guidance applies to Category II and Category III firms – so-called triennial filers. The Guidance for foreign banking organisations (the “FBO Guidance”) expands the applicabil - ity of, and amends, the prior 2020 165(d) for - eign banking organisations guidance to cover a broader range of large foreign banking organisa - tions. The 165(d) Plan Guidance for domestic banking organisations (the “DBO Guidance”) represents the first time the agencies have
promulgated broadly applicable guidance for large domestic banking organisations that are not large enough to be considered Global Sys - temically Important Banks (G-SIBs). Both the FBO and DBO Guidance largely mirror the proposed versions published last Septem - ber, but with a handful of noteworthy changes: • Timing: The FDIC and FRB extended the next full 165(d) Rule resolution plan submission deadline from 31 March to 1 October 2025, in order to provide adequate opportunity for firms to reflect the new Guidance in their full resolution plan submissions. • No derivatives or trading activities expecta - tions: In the final 165(d) Plan Guidance, the agencies removed the derivatives and trading activities expectations, for which they had sought comment in the proposals, for cov - ered firms. • Clarification on foreign information require - ments: The FBO Guidance clarifies that an organisation need not provide information about its global resolution strategy that it does not possess, nor must it identify certain differences between its 165(d) Rule resolution plan and global resolution strategies. • No separability expectations for domestic organisations: The DBO Guidance did not incorporate separability expectations for these followers, though the agencies reserve the right to consider potential needs for firm- specific separability expectations in certain instances. In contrast, the separability expec - tations for foreign banking organisations are maintained in the FBO Guidance for all filers. OCC proposal on large bank recovery planning In June, the OCC requested comments on a proposal that would update the Comptrol -
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