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.