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Major banks not prepared to deal with collapse say US regulators

US regulators say a group of major global banks including UBS, JP Morgan and Barclays have not yet met demands to show how they could be unwound in the event of a crisis.

The US Federal Deposit Insurance Corporation and Federal Reserve last night issued a note warning that eleven banking organisation had failed to show a “strategy for rapid and orderly resolution in the event of material financial distress or failure of the company”.

Eleven banks with more that $50bn in total assets are required to submit “living will” documents to US regulators.

Last night regulators responded to the second round of submissions, stating that although some improvements had been made, the plans fell short of their expectations.

Major failures include inadequate estimations of the response of customers and counterparties in the event of a crisis, and failure to identify structural changes that would be needed to allow a firm to be wound up if necessary.

The banks have been told to establish less complex legal structures, develop holding companies that support “resolvability” and develop shared services across the sector to support core services. 

The banks include: Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street Corp, and UBS.

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There is one comment at the moment, we would love to hear your opinion too.

  1. Considering the huge amount of damage these major global banks can cause I don’t think the US regulator is being unreasonable,

    ? did I just say the regulator (albeit the US one) was not being unreasonable ! better go have a lie down !

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