Banks with at least $100 billion in assets must develop and submit detailed plans demonstrating how they could be resolved “in an orderly and timely manner” under a rule approved Thursday by the board of the federal bank deposit insurance agency.
The board took the action meeting in open session in Washington, D.C.
The Federal Deposit Insurance Corp. (FDIC) Board approved the final rule, which was proposed in September 2023. Under the final rule, covered insured depository institutions (CIDIs) – that is, those with $100 billion or more in assets (Group A CIDIs) – must develop resolution plans that include an identified strategy that provides timely access to insured deposits, maximizes value from the sale or disposition of assets, minimizes any losses realized by creditors in resolution, and addresses potential risk of adverse effects on US economic conditions or financial stability.
Also included in the final rule: CIDIs with at least $50 billion but less than $100 billion in total assets (Group B CIDIs) are required to submit more limited informational filings that will support the development of strategic options for resolution of the CIDI by the FDIC.
The final rule also requires that CIDIs be able to demonstrate the capabilities necessary to ensure that franchise components, such as asset portfolios or lines of business, are marketable in resolution. Those submissions, according to the final rule, must describe capabilities to establish a virtual data room in a timely manner to market such franchise components. Such capabilities would improve not only the likelihood of orderly resolution, but also the chances of recovery when banks are in stress, according to the FDIC Board.
The final rule will take effect on Oct. 1; the FDIC said first submissions are expected next year
Acting Comptroller Issues Statement on FDIC Resolution Plan Rule