On July 30, the Fed and the FDIC published final guidance to enhance resolution planning at large banks. The guidance aims to assist certain larger financial institutions in developing their resolution plans, which are required under section 165(d) of Dodd-Frank.

The “Guidance for Resolution Plan Submissions of Domestic Triennial Full Filers,“ applies to domestic Category II and III banking organizations, referred to as domestic triennial full filers. Key challenges for resolution discussed in the guidance include resolution capital adequacy and positioning (RCAP) and resolution capital execution need (RCEN), ensuring firms have sufficient capital to support material entities during resolution. Liquidity requirements are addressed through resolution liquidity adequacy and positioning (RLAP) and resolution liquidity execution need (RLEN), ensuring firms can meet liquidity needs during resolution. The guidance also addresses (i) governance mechanisms, including clearly identified triggers for specific actions to mitigate vulnerabilities; (ii) maintaining operational capabilities related to payment, clearing, and settlement activities, and collateral management; (iii) arrangements to support the continuity of shared and outsources services; (iv) legal entity rationalization criteria; and (v) expectations for analyzing how the resolution strategy aligns with the FDIC’s statutory least-cost requirement for insured depository institutions.

The agencies concurrently released “Guidance for Resolution Plan Submissions of Foreign Triennial Full Filers," which applies to foreign Category II and III banking organizations, referred to as foreign triennial full filers. The guidance focuses on the interaction between the global resolution plan and U.S. operations, requiring firms to describe the impact of executing the global plan on U.S. operations. Similar to the domestic guidance, it addresses expectations for capital adequacy and positioning (RCAP) and resolution capital execution need (RCEN) for U.S. operations, as well as liquidity requirements through RLAP and RLEN expectations. The guidance also discusses the governance mechanisms that a firm should identify to ensure coordination between U.S. operations and foreign parent entities; capabilities for managing continuity of payment, clearing, and settlement activities; capabilities to manage, identify, and value collateral; information systems capabilities; the continuity of operations; the development of legal entity rationalization criteria; separability options; and whether an analysis is required to show that the FDIC could resolve the failed bank in a manner consistent with the FDIC’s statutory least-cost requirement.