64626 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

1 12 U.S.C. 5365(d). 

2 12 CFR parts 243 and 381. 

3 12 CFR 243.4 and 12 CFR 381.4. The terms 

‘‘covered company’’ and ‘‘triennial full filer’’ have 

the meanings given in the Rule, as do other, similar 

terms used throughout this proposal. 

4 12 CFR 243.4(b) and 12 CFR 381.4(b). 

FEDERAL RESERVE SYSTEM 

[Docket No. OP–1816] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

RIN 3064–ZA37 

Guidance for Resolution Plan 

Submissions of Domestic Triennial 

Full Filers 

AGENCY: Board of Governors of the 

Federal Reserve System (Board) and 

Federal Deposit Insurance Corporation 

(FDIC). 

ACTION: Proposed guidance; request for 

comments. 

SUMMARY: The Board and the FDIC 

(together, the agencies) are inviting 

comments on proposed guidance for the 

2024 and subsequent resolution plan 

submissions by certain domestic 

banking organizations. The proposed 

guidance is meant to assist these firms 

in developing their resolution plans, 

which are required to be submitted 

pursuant to the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, as 

amended (the Dodd-Frank Act), and the 

jointly issued implementing regulation 

(the Rule). The scope of application of 

the proposed guidance would be 

domestic triennial full filers (specified 

firms or firms), which are domestic 

Category II and III banking 

organizations. The proposed guidance is 

based on the agencies’ review of the 

specified firms’ 2021 and prior 

resolution plan submissions, as well as 

the agencies’ experiences resolving 

several large domestic banking 

organizations, and would describe the 

agencies’ expectations regarding several 

aspects of the specified firms’ plans for 

an orderly resolution under the U.S. 

Bankruptcy Code. The agencies invite 

public comment on all aspects of the 

proposed guidance. 

DATES: Comments must be received by 

November 30, 2023. 

ADDRESSES: Interested parties are 

encouraged to submit written comments 

jointly to both agencies. Comments 

should be directed to: 

Board: You may submit comments, 

identified by Docket No. OP–1816, by 

any of the following methods: 

• Agency Website: http://

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Email: regs.comments@

federalreserve.gov. Include docket 

number in the subject line of the 

message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Ann E. Misback, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. 

In general, all public comments will 

be made available on the Board’s 

website at www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm as 

submitted, and will not be modified to 

remove confidential, contact or any 

identifiable information. Public 

comments may also be viewed 

electronically or in paper in Room M– 

4365A, 2001 C St. NW, Washington, DC 

20551, between 9:00 a.m. and 5:00 p.m. 

during federal business weekdays. 

FDIC: You may submit comments, 

identified by RIN 3064–ZA37, by any of 

the following methods: 

• FDIC Website: https://

www.fdic.gov/resources/regulations/ 

federal-register-publications/. Follow 

the instructions for submitting 

comments on the FDIC’s website. 

• Email: comments@fdic.gov. Include 

‘‘RIN 3064–ZA37’’ on the subject line of 

the message. 

• Mail: James P. Sheesley, Assistant 

Executive Secretary, Attention: 

Comments-RIN 3064–ZA37, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery/Courier: Comments 

may be hand delivered to the guard 

station at the rear of the 550 17th Street 

NW building (located on F Street NW) 

on business days between 7 a.m. and 5 

p.m. 

• Public Inspection: Comments 

received, including any personal 

information provided, may be posted 

without change to https://www.fdic.gov/ 

resources/regulations/federal-registerpublications/. Commenters should 

submit only information that the 

commenter wishes to make available 

publicly. The FDIC may review, redact, 

or refrain from posting all or any portion 

of any comment that it may deem to be 

inappropriate for publication, such as 

irrelevant or obscene material. The FDIC 

may post only a single representative 

example of identical or substantially 

identical comments, and in such cases 

will generally identify the number of 

identical or substantially identical 

comments represented by the posted 

example. All comments that have been 

redacted, as well as those that have not 

been posted, that contain comments on 

the merits of this document will be 

retained in the public comment file and 

will be considered as required under all 

applicable laws. All comments may be 

accessible under the Freedom of 

Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Board: Catherine Tilford, Deputy 

Associate Director, (202) 452–5240, 

Elizabeth MacDonald, Assistant 

Director, (202) 475–6316, Tudor Rus, 

Lead Financial Institution Analyst, (202) 

475–6359, Division of Supervision and 

Regulation; or Jay Schwarz, Assistant 

General Counsel, (202) 452–2970; 

Andrew Hartlage, Special Counsel, (202) 

452–6483; Sarah Podrygula, Senior 

Attorney, (202) 912–4658; or Brian 

Kesten, Senior Attorney, (202) 843– 

4079, Legal Division, Board of 

Governors of the Federal Reserve 

System, 20th Street and Constitution 

Avenue NW, Washington, DC 20551. 

For users of TTY–TRS, please call 711 

from any telephone, anywhere in the 

United States. 

FDIC: Robert C. Connors, Senior 

Advisor, (202) 898–3834, Division of 

Complex Financial Institution 

Supervision and Resolution; Celia Van 

Gorder, Senior Counsel, (202) 898–6749; 

Esther Rabin, Counsel, (202) 898–6860, 

erabin@fdic.gov, Legal Division. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

II. Overview of the Proposed Guidance 

III. Paperwork Reduction Act 

Appendix: Text of the Proposed Guidance 

I. Background 

A. The Dodd-Frank Act and the Rule 

Section 165(d) of the Dodd-Frank 

Act 1 and the Rule 2 require certain 

financial institutions to report 

periodically to the Board and the FDIC 

their plans for rapid and orderly 

resolution under the U.S. Bankruptcy 

Code (the Bankruptcy Code) in the event 

of material financial distress or failure. 

The Rule divides covered companies 

into three groups of filers: (a) biennial 

filers; (b) triennial full filers; and (c) 

triennial reduced filers.3

Triennial full filers under the Rule are 

required to file a resolution plan every 

three years, alternating between full and 

targeted resolution plans.4 The Rule 

requires each covered company’s full 

resolution plan to include, among other 

things, a strategic analysis of the plan’s 

components, a description of the range 

of specific actions the covered company 

proposes to take in resolution, and a 

description of the covered company’s 

organizational structure, material 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64627 

5 12 CFR 243.5 and 12 CFR 381.5. 

6 12 CFR 243.6(b) and 12 CFR 381.6(b). 

7 12 CFR 243.11(c) and 12 CFR 381.11(c). 

8The public sections of resolution plans 

submitted to the agencies are available at 

www.federalreserve.gov/supervisionreg/resolutionplans.htm and www.fdic.gov/regulations/reform/ 

resplans/. 

9 Guidance for § 165(d) Resolution Plan 

Submissions by Domestic Covered Companies 

applicable to the Eight Largest, Complex U.S. 

Banking Organizations, 84 FR 1438 (Feb. 4, 2019) 

(2019 GSIB Guidance). 

10 Guidance for Resolution Plan Submissions of 

Certain Foreign-Based Covered Companies, 85 FR 

83557 (Dec. 22, 2020) (2020 FBO Guidance). 

11https://www.federalreserve.gov/newsevents/ 

pressreleases/bcreg20220930a.htm. 

12For example, the FDIC—upon the 

recommendation of two-thirds of each of the board 

of directors of the FDIC and the Board, as well as 

a determination by the Secretary of the Treasury, in 

consultation with the President—resolved SVB and 

SB using the systemic risk exception to the 

statutory requirement to employ the least-costly 

method to resolve a failed IDI. https://

www.federalreserve.gov/newsevents/pressreleases/ 

monetary20230312b.htm; https://www.fdic.gov/ 

news/press-releases/2023/pr23017.html. 

13This proposed rulemaking is published 

elsewhere in this Federal Register. 

14The public also may provide comments on the 

proposed guidance that assume that no long-term 

debt rule is finalized and that specified firms 

remain subject to current capital rules. 

entities, and interconnections and 

interdependencies.5 Targeted resolution 

plans are required to include a subset of 

information contained in a full plan.6 In 

addition, the Rule requires that all 

resolution plans consist of two parts: a 

confidential section that contains any 

confidential supervisory and proprietary 

information submitted to the agencies 

and a section that the agencies make 

available to the public.7 Public sections 

of resolution plans can be found on the 

agencies’ websites.8

B. Recent Developments 

Implementation of the Rule has been 

an iterative process aimed at 

strengthening the resolution planning 

capabilities of financial institutions 

subject to the Rule. To assist the 

development of covered companies’ 

resolution planning capabilities and 

plan submissions, the agencies have 

provided feedback on individual plan 

submissions, promulgated guidance to 

certain groups of covered companies, 

and issued answers to frequently asked 

questions. The agencies believe that 

guidance can help focus the efforts of 

similarly situated covered companies to 

improve their resolution capabilities 

and clarify the agencies’ expectations 

for those filers’ future progress. The 

agencies have issued guidance to: (a) 

U.S. global systemically important 

banks (GSIBs); 9 which constitute the 

biennial filer group; and (b) certain large 

foreign banking organizations (FBOs) 

that are triennial full filers.10 The 

agencies have not, however, issued 

guidance to the domestic firms and 

additional FBOs that make up the 

remainder of the triennial full filers. 

As the agencies previously 

indicated,11 they believe that it is now 

appropriate to issue guidance to the 

specified firms. The agencies’ review of 

the 2021 targeted resolution plans 

submitted by domestic triennial full 

filers revealed significant 

inconsistencies in the amount and 

nature of information they provided on 

critical informational elements required 

by the Rule. In addition, some 

resolution plans included optimistic 

assumptions regarding the availability 

of financial resources at the firm at the 

time of a bankruptcy filing as well as the 

ability of a firm to access financial 

assistance prior to and during 

resolution. The agencies believe that 

future resolution plans from these firms 

would benefit from guidance regarding 

critical informational elements required 

by the Rule as well as appropriate 

assumptions. 

The proposed guidance also reflects 

the agencies’ recent experience with 

Silicon Valley Bank (SVB), Signature 

Bank (SB), and First Republic Bank 

(First Republic). While SVB, SB, and 

First Republic were not required to file 

resolution plans under section 165(d) of 

the Dodd-Frank Act and the Rule, the 

effects of their failures illustrate that the 

failure of a large insured depository 

institution (IDI) may have serious 

adverse effects on financial stability in 

the United States.12 This experience 

illustrates the importance of issuing 

guidance to domestic triennial full filers 

(many of which have large subsidiary 

IDIs) to assist their progress in 

developing plans for an orderly 

resolution in the event of material 

financial distress or failure. 

C. Resolution Plan Strategy 

The specified firms have adopted one 

of two resolution strategies: a single 

point of entry (SPOE) or multiple point 

of entry (MPOE) strategy. The SPOE and 

MPOE resolution plan strategies require 

firms to consider different risks and 

require different types of planning and 

development of capabilities for the 

execution of the respective strategies. 

The agencies do not prescribe a specific 

resolution strategy for any covered 

company, nor do the agencies identify a 

preferred strategy. The proposed 

guidance is not intended to favor one 

strategy or another. Specified filers may 

continue to submit resolution plans 

using the resolution strategies they 

believe would be most effective in 

achieving an orderly resolution of their 

firms, but a resolution plan must 

address the key vulnerabilities and 

support the underlying assumptions 

required to successfully execute the 

chosen resolution strategy. 

Under an SPOE strategy for a U.S. 

firm, all material entity subsidiaries are 

recapitalized and provided with 

liquidity, if needed, so that only the top 

tier bank holding company (BHC) enters 

resolution. The MPOE approach entails 

multiple U.S. material entities entering 

separate resolution proceedings: any 

top-tier U.S. material entity holding 

company enters bankruptcy; any U.S. 

material entity IDI subsidiary is resolved 

separately under the Federal Deposit 

Insurance Act of 1950, as amended (the 

FDI Act); and other individual U.S. 

material entity subsidiaries separately 

enter bankruptcy (or another 

appropriate resolution regime) or are 

wound down. All of the specified firms 

presented an MPOE strategy in their 

2021 targeted resolution plan 

submissions. 

D. Long-Term Debt Rulemaking 

The agencies, as well as the Office of 

the Comptroller of the Currency, are 

issuing a proposed rule for comment 

that would require certain large IDI 

holding companies, U.S. intermediate 

holding companies of FBOs, and certain 

IDIs, to issue and maintain outstanding 

a minimum amount of long-term debt 

(LTD), among other proposed 

requirements.13 This proposed rule 

would improve the resolvability of these 

firms, and, in particular, their IDI 

subsidiaries, in case of failure, reducing 

costs to the Deposit Insurance Fund 

(DIF), and mitigating financial stability 

and contagion risks by reducing the risk 

of loss to uninsured depositors. LTD 

issued by the IDI could help support 

resolution strategies by, among other 

things, recapitalizing a bridge 

depository institution and facilitating its 

exit from resolution as a newly 

chartered IDI that would have new 

ownership. The agencies expect that a 

final long-term debt rule could interact 

with how the specified firms plan for 

resolution under the Rule, and the 

agencies anticipate ensuring that the 

final resolution plan guidance for 

domestic triennial full filers is 

consistent with any final long-term debt 

rule. Accordingly, the agencies welcome 

comments that take the proposed longterm debt rulemaking into 

consideration.14

II. Overview of the Proposed Guidance 

The proposed guidance begins with 

the proposed scope and then is 

organized into several substantive 


ddrumheller on DSK120RN23PROD with NOTICES2
64628 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

topical areas. Each substantive topic is 

bifurcated, with separate guidance for 

an SPOE resolution strategy and an 

MPOE resolution strategy. As discussed, 

each resolution strategy poses distinct 

risks and requires its own type of 

planning and capabilities development 

for executing the strategy. Accordingly, 

the proposed guidance would account 

for the different challenges posed by 

each approach. 

The proposed guidance for firms that 

adopt an SPOE resolution strategy is 

generally based on the 2019 GSIB 

Guidance, with certain modifications 

that reflect the specific characteristics of 

and potential risks posed by the failure 

of the specified firms. Successful 

execution of an SPOE strategy relies on 

the ability to provide sufficient capital 

and liquidity to material entities, a 

governance structure that can identify 

the onset of financial stress events, and 

the ability to ensure the timely 

execution of the strategy and to 

maintain continuity of operations 

throughout resolution. 

The proposed guidance for firms that 

utilize an MPOE resolution strategy 

incorporates certain aspects of the 2019 

GSIB Guidance that the agencies believe 

are applicable to large banking 

organizations, with modifications 

appropriate to this strategy and 

institutions with the characteristics 

displayed by the specified firms. For 

MPOE firms, the proposed guidance 

also omits aspects of the 2019 GSIB 

Guidance that would not apply in an 

MPOE resolution. The agencies are, 

however, proposing to clarify their 

expectations for specified firms that 

utilize an MPOE strategy that includes 

the resolution of a material entity that 

is a U.S. IDI. As discussed elsewhere in 

this proposal, the resolution of a large 

U.S. IDI under the FDI Act likely would 

pose substantial operational and legal 

challenges and complexities. 

Accordingly, the agencies believe that 

the resolution plans of firms whose 

resolution plans contemplate the 

separate resolution of a material entity 

that is a U.S. IDI would benefit from 

developing capabilities specific to and 

considering legal requirements 

regarding U.S. IDI resolution. 

The agencies believe that each 

substantive area of the proposed 

guidance would play a part in helping 

to ensure that the specified firms can be 

resolved in an orderly manner. The 

proposed guidance would describe the 

agencies’ expectations for each of these 

areas. In addition, the proposed 

guidance would consolidate items of 

feedback provided to a number of the 

specified firms in the past, thereby 

providing the public with one source of 

applicable guidance for the specified 

firms. The proposed guidance is not, 

however, intended to override the 

obligation of an individual specified 

firm to respond, in its next resolution 

plan submission, to pending items of 

individual feedback or any 

shortcomings or deficiencies identified 

or determined by the agencies in that 

specified firm’s prior resolution plan 

submission. The proposed guidance also 

is not meant to limit specified firms’ 

consideration of additional 

vulnerabilities or obstacles that might 

arise based on a firm’s particular 

structure, operations, or resolution 

strategy, and that should be factored 

into the specified firm’s resolution plan 

submission. 

The proposed guidance concludes 

with information about the format and 

structure of a plan that applies equally 

to plans contemplating either an SPOE 

strategy or an MPOE strategy. 

A. Scope of Application 

The agencies propose to apply the 

guidance to all domestic triennial full 

filers. The Board’s tailoring framework 

provides clear, predictable scoping 

based on publicly reported quantitative 

data. As discussed above, the agencies 

believe that it is appropriate to provide 

resolution planning guidance to all 

domestic triennial full filers given 

issues identified in these firms’ 2021 

targeted resolution plans and 

considering lessons learned from recent 

events. 

The agencies would like the specified 

firms to submit resolution plans that 

take into consideration the final version 

of the proposed guidance as soon as 

practicable. However, the agencies 

understand that the specified firms may 

need time to take into consideration the 

guidance when developing their 

resolution plans. In light of the timing 

of this proposal, the agencies are 

considering providing a short extension 

of the next resolution plan submission 

date for the specified firms, with the 

expectation that these plan submissions 

would be due sooner than one year after 

the proposed guidance is published in 

final form. 

The agencies seek comment on all 

aspects of the proposed scope of 

application. 

Question 1: Should the agencies 

provide more than 6 months for the 

specified firms to take into 

consideration the expectations in the 

proposed guidance, once finalized? If 

so, what time period should the 

agencies provide? 

B. Capital 

For specified firms with an SPOE 

resolution strategy, the agencies propose 

guidance substantially similar to the 

2019 GSIB Guidance regarding capital. 

The ability to provide sufficient capital 

to material entities without disruption 

from creditors is important in order to 

ensure that material entities can 

continue to maintain operations as the 

firm is resolved. The proposal describes 

expectations concerning the appropriate 

positioning of capital and other lossabsorbing instruments (e.g., debt that a 

parent holding company may choose to 

forgive or convert to equity) among the 

material entities within the firm 

(resolution capital adequacy and 

positioning, or RCAP). The positioning 

of capital resources within the firm 

should be consistent with any 

applicable rules requiring prepositioned 

resources in IDIs in the form of longterm debt. The proposal also describes 

expectations regarding a methodology 

for periodically estimating the amount 

of capital that may be needed to support 

each material entity after the bankruptcy 

filing (resolution capital execution need, 

or RCEN). 

The agencies are not proposing 

further expectations concerning capital 

to firms whose plans contemplate an 

MPOE resolution strategy, as an MPOE 

strategy assumes most material entities 

do not continue as going concerns upon 

entry into resolution. 

Question 2: In addition to the capitalrelated resolution plan requirements 

under the Rule, are there other capitalrelated expectations that would 

reasonably enhance the resolvability of 

a specified firm that utilizes an MPOE 

strategy in its resolution plan? 

Question 3: Do the capital-related 

resolution expectations in the proposed 

guidance align with the provisions of 

the interagency long-term debt 

rulemaking proposal? Are there any 

aspects of the proposed guidance that 

should be revised, or additional 

expectations added, in light of the 

interagency long-term debt rulemaking 

proposal? 

Question 4: Is it appropriate for a 

specified firm utilizing an SPOE 

resolution strategy to assume, during the 

transition period for any final long-term 

debt rulemaking, that the entire amount 

of debt required under the rule after the 

transition period has been issued? 

C. Liquidity 

For firms that adopt an SPOE 

resolution strategy, the agencies propose 

guidance substantially similar to the 

2019 GSIB Guidance regarding liquidity. 

A firm’s ability to reliably estimate and 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64629 

15SR letter 14–1, ‘‘Principles and Practices for 

Recovery and Resolution Preparedness’’ (Jan. 24, 

2014), available at https://www.federalreserve.gov/ 

supervisionreg/srletters/sr1401.htm. 

meet its liquidity needs prior to, and in, 

resolution is important to the execution 

of a firm’s resolution strategy because it 

enables the firm to respond quickly to 

demands from stakeholders and 

counterparties, including regulatory 

authorities in other jurisdictions and 

financial market utilities. Maintaining 

sufficient and appropriately positioned 

liquidity also allows the subsidiaries to 

continue to operate while the firm is 

being resolved in accordance with the 

firm’s preferred resolution strategy. 

For firms that adopt an MPOE 

resolution strategy, the agencies propose 

that a firm should have the liquidity 

capabilities necessary to execute its 

preferred resolution strategy, and its 

plan should include analysis and 

projections of a range of liquidity needs 

during resolution. 

Question 5: In addition to the 

liquidity-related resolution plan 

requirements under the Rule and the 

liquidity-related expectations in the 

proposed guidance, are there other 

liquidity related expectations that 

would reasonably enhance the 

resolvability of a specified firm that 

utilizes an MPOE resolution strategy? 

Are there circumstances under which it 

would be appropriate for a resolution 

plan that utilizes an MPOE strategy to 

include the movement of liquidity 

among material entities that are in 

resolution? 

D. Governance Mechanisms 

For firms using an SPOE resolution 

strategy, the agencies propose guidance 

that is substantially similar to the 2019 

GSIB Guidance regarding governance 

mechanisms. An adequate governance 

structure with triggers that identify the 

onset, continuation, and increase of 

financial stress is important to ensure 

that there is sufficient time to allow 

firms to prepare for resolution, and to 

ensure the timely execution of the 

resolution strategy. The governance 

mechanisms section proposes 

expectations that firms have playbooks 

that describe the board and senior 

management actions necessary to 

execute the firm’s preferred strategy. In 

addition, the proposal describes 

expectations that these firms have 

triggers that are linked to specific 

actions outlined in these playbooks to 

ensure the timely escalation of 

information to senior management and 

the board, to address the successful 

recapitalization of subsidiaries prior to 

the parent’s bankruptcy, and to address 

how the firm would ensure the timely 

execution of a bankruptcy filing. The 

proposal also describes the expectations 

that firms identify and analyze potential 

legal challenges to the provision of 

capital and liquidity to subsidiaries that 

would precede the parent’s bankruptcy 

filing under an SPOE resolution 

strategy, and any defenses and mitigants 

to such challenges. 

The agencies do not propose issuing 

guidance on this topic to firms whose 

resolution plans contemplate an MPOE 

resolution strategy, as entry of many 

types of material entities, including 

IDIs, into resolution would be 

determined by criteria prescribed in 

statute or dependent to some extent on 

actions taken by regulatory authorities 

in implementing a statute. 

Question 6: Should the agencies 

consider applying aspects of the 

governance mechanisms guidance 

developed for an SPOE strategy to 

resolution plans utilizing an MPOE 

resolution strategy? If, so, what aspects 

should be extended to resolution plans 

utilizing an MPOE resolution strategy? 

Should the agencies consider 

developing new governance 

mechanisms guidance specific to 

resolution plans utilizing an MPOE 

resolution strategy? 

Question 7: If a specified firm chooses 

to switch from utilizing an MPOE 

resolution strategy to an SPOE 

resolution strategy in its resolution plan, 

should the agencies provide a transition 

period for a firm to take into 

consideration the SPOE-specific 

guidance when developing its resolution 

planning capabilities and its next 

resolution plan? If so, are there aspects 

that should have a shorter transition 

period, and what period or periods 

would be appropriate? 

E. Operational 

The development and maintenance of 

operational capabilities is important to 

support and enable execution of a firm’s 

preferred resolution strategy, including 

providing for the continuation of 

identified critical operations and 

preventing or mitigating adverse effects 

on U.S. financial stability. For firms that 

utilize an SPOE resolution strategy, the 

agencies propose adopting portions of 

the operational expectations of the 2019 

GSIB Guidance and SR letter 14–1,15

with modifications that reflect the 

specific characteristics and complexities 

of the specified firms. Like the 2019 

GSIB Guidance, the proposal contains 

expectations on payment, clearing and 

settlement activities, managing, 

identifying and valuing collateral, 

management information systems, and 

shared and outsourced services. For 

firms that utilize an MPOE resolution 

strategy, the agencies propose adopting 

expectations based on SR letter 14–1 

and the 2019 GSIB Guidance that are 

most relevant to an MPOE resolution 

strategy. For example, the proposed 

expectations regarding payment, 

clearing and settlement activities are 

those most likely to support resolution 

in the MPOE context. 

F. Legal Entity Rationalization & 

Separability 

For specified firms that utilize an 

SPOE resolution strategy, the agencies 

propose substantively adopting the 2019 

GSIB Guidance regarding legal entity 

rationalization and separability. It is 

important that firms maintain a 

structure that facilitates orderly 

resolution. To achieve this, the proposal 

states that a firm should develop and 

describe in their plans criteria 

supporting its resolution strategy and 

integrate them into day-to-day decisionmaking processes. The criteria would be 

expected to consider the best alignment 

of legal entities and business lines and 

facilitate resolvability as a firm’s 

activities, technology, business models, 

or geographic footprint change over 

time. In addition, the proposed 

guidance provides that the firm should 

identify discrete operations that could 

be sold or transferred in resolution to 

provide meaningful optionality for the 

resolution strategy under a range of 

potential failure scenarios and include 

this information in their plans. 

For firms that utilize an MPOE 

resolution strategy, the proposed 

guidance would clarify that the firms 

should have legal entity structures that 

support their preferred resolution 

strategy and describe those structures in 

their plans. The proposal also provides 

that to the extent a material entity IDI 

relies upon other affiliates during 

resolution, the firm should discuss its 

rationale for the legal entity structure 

and associated resolution risks and 

potential mitigants. In addition, the 

agencies propose that the firms include 

options for the sale, transfer, or disposal 

of significant assets, portfolios, legal 

entities, or business lines in resolution. 

Question 8: Are there other 

separability related expectations that 

would reasonably enhance resolution 

plans that utilize an MPOE resolution 

strategy? 


ddrumheller on DSK120RN23PROD with NOTICES2
64630 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

16The FDIC has a separate rule requiring 

resolution plans from certain IDIs, 12 CFR 360.10, 

‘‘Resolution Plans Required for Insured Depository 

Institutions With $50 Billion or More in Total 

Assets’’ (the IDI Rule). The Rule and the IDI Rule 

each have different goals and the expected content 

of the respective resolution plans accordingly also 

is different. The Rule requires a covered company 

to submit a resolution plan that would allow rapid 

and orderly resolution of the covered company 

under the Bankruptcy Code in the event of material 

financial distress or failure. The purpose of the IDI 

Rule is to ensure that the FDIC has access to all of 

the material information it needs to efficiently 

resolve an IDI in the event of its failure. 

17See 12 U.S.C. 1823(c)(4). A deposit payout and 

liquidation of the failed IDI’s assets (payout 

liquidation) is the general baseline the FDIC uses in 

a least-cost requirement determination. See 12 

U.S.C. 1823(c)(4)(D). 

18See 12 U.S.C. 1823(c)(4)(G). 

19See generally https://www.fdic.gov/resources/ 

resolutions/bank-failures/ for background about the 

resolution of IDIs by the FDIC. 

20See Remarks by Chairman Martin J. Gruenberg 

on ‘‘Oversight of Prudential Regulators’’ before the 

Committee on Financial Services, United States 

House of Representatives available at https:// 

www.fdic.gov/news/speeches/2023/ 

spmay1523.html; see also Remarks by Chairman 

Martin J. Gruenberg on ‘‘Recent Bank Failures and 

the Federal Regulatory Response’’ before the 

Committee on Banking, Housing, and Urban Affairs, 

United States Senate available at https:// 

www.fdic.gov/news/speeches/2023/ 

spmar2723.html. 

21To protect depositors and preserve the value of 

the assets and operations of each of SVB and SB 

following failure—which can improve recoveries 

for creditors and the DIF—the FDIC ultimately 

transferred all the deposits and substantially all of 

the assets of each failed bank to a full-service bridge 

depository institution (BDI) operated by the FDIC 

while the FDIC marketed the institutions to 

potential bidders. 

22Before a BDI may be chartered, the chartering 

conditions set forth in 12 U.S.C. 1821(n)(2) must 

also be satisfied. For purposes of this guidance, if 

the Plan provides appropriate analysis concerning 

the feasibility of the BDI strategy, there is no 

expectation that the resolution plan also 

demonstrate separately that the conditions for 

chartering the BDI have been satisfied. 

G. Insured Depository Institution (IDI) 

Resolution 16

Background. When an IDI fails and 

the FDIC is appointed receiver, the FDIC 

generally must utilize the resolution 

option for the failed IDI that is least 

costly to the DIF of all possible methods 

(the least-cost requirement).17 An 

exception to this requirement is 

provided where a determination is made 

by the Secretary of the Treasury, in 

consultation with the President and 

after a written recommendation from 

two-thirds of the FDIC’s Board of 

Directors and two-thirds of the Board, 

that complying with the least-cost 

requirement would have serious adverse 

effects on economic conditions or 

financial stability and implementing 

another resolution option would avoid 

or mitigate such adverse effects.18 A 

specified firm should not assume the 

use of this systemic risk exception to the 

least-cost requirement in its resolution 

plan. 

Purchase and Assumption 

Transaction. The FDIC typically seeks 

to resolve a failed IDI by identifying, 

before the IDI’s failure, one or more 

potential acquirers so that as many of 

the IDI’s assets and deposit liabilities as 

possible can be sold to and assumed by 

the acquirer(s) instead of remaining in 

the receivership created on the failure 

date.19 This transaction form, termed a 

‘‘purchase and assumption’’ or ‘‘P&A’’ 

transaction, has historically been the 

resolution approach that is least costly 

to the DIF, easiest for the FDIC to 

execute, and least disruptive to the 

depositors of the failed IDI—particularly 

in the case of transactions involving the 

assumption of all the failed IDI’s 

deposits by the assuming institution (an 

‘‘all-deposit transaction’’)—and 

typically can be completed over the 

weekend following the IDI’s closure by 

its primary regulator but before business 

ordinarily would commence the 

following Monday (closing weekend). 

The limited size and operational 

complexity present in most small-bank 

failures has allowed the FDIC to execute 

a P&A transaction with a single acquirer 

on numerous occasions. Resolving an 

IDI via a P&A transaction over the 

closing weekend, however, may not be 

available to the FDIC, particularly in 

failures involving large IDIs. P&A 

transactions require lead time to 

identify potential buyers and allow due 

diligence on, and an auction of, the 

failing IDI’s assets and banking 

business, also termed its ‘‘franchise.’’ 

Additionally, larger banks can pose 

significant, and potentially systemic, 

challenges in resolutions. These 

challenges include: a more limited pool 

of potential acquirers as a failed IDI 

increases in size, which makes a 

transaction in which nearly all assets 

and liabilities are transferred to one or 

more acquirers increasingly less likely; 

operational complexities which require 

advance planning on the part of the IDI 

and the FDIC and the development of 

certain capabilities; potential market 

concentration and antitrust 

considerations; and potentially the need 

to maintain the continuity of activities 

conducted in whole or in part in the IDI 

that are critical to U.S. financial 

stability. 

For example, the largest failed IDI in 

U.S. history, Washington Mutual Bank, 

had approximately $307 billion in 

assets. The DIF did not incur a loss 

associated with this failure in part 

because it benefitted from the FDIC’s 

sale of the institution to an acquirer 

which had first engaged in exhaustive 

due diligence of the institution during a 

self-marketing effort conducted by the 

IDI prior to its failure. A more recent 

example, that of First Republic Bank, 

which was also acquired in an alldeposit transaction, illustrates that such 

a transaction can be difficult to 

effectuate. The FDIC invited 21 banks 

and 21 nonbanks to participate in the 

bidding process and received bids from 

only four bidders.20 The least costly bid 

necessitated a loss-sharing agreement, 

and the transaction is expected to result 

in a significant loss to the DIF. In 

addition, the FDIC received only one 

viable bid for Silicon Valley Bank 

during the weekend following its 

failure, but this bid did not satisfy the 

least-cost test. The FDIC received no 

viable all-deposit bids for Signature 

Bank at the time it failed.21

If no P&A transaction that meets the 

least-cost requirement can be 

accomplished at the time an IDI fails, 

the FDIC must pursue an alternative 

resolution strategy. The primary 

alternative resolution strategies for a 

failed IDI are: (1) a payout liquidation; 

or (2) utilization of a BDI. The FDIC 

conducts payout liquidations by paying 

insured deposits in cash or transferring 

the insured deposits to an existing 

institution or a new institution 

organized by the FDIC to assume the 

insured deposits (generally, a Deposit 

Insurance National Bank or DINB). In 

payout liquidations, the FDIC as 

receiver retains substantially all of the 

failed IDI’s assets for later sale, and the 

franchise value of the failed IDI is lost. 

Bridge Depository Institution. If the 

FDIC determines that temporarily 

continuing the operations of the failed 

IDI is less costly than a payout 

liquidation, it may organize a BDI to 

purchase certain assets and assume 

certain liabilities of the failed IDI.22

Generally, a BDI would continue the 

failed bank’s operations according to 

business plans and budgets approved by 

the FDIC and carried out by FDICselected leadership of the BDI. In 

addition to providing depositors access 

to deposits and banking services, the 

BDI would conduct any necessary 

restructuring required to rationalize the 

failed IDI’s operations and maximize 

value to be achieved in an eventual sale. 

Subject to the least-cost requirement, 

the initial structure of the BDI may be 

based upon an all-deposit transaction, a 

transaction in which the BDI assumes 

only the insured deposits, or a 

transaction in which the BDI assumes 

all insured deposits and a portion of the 

uninsured deposits. Once a BDI is 

established, the FDIC seeks to stabilize 

the institution while simultaneously 

planning for the eventual termination of 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64631 

23 12 U.S.C. 1821(n)(10). 

the BDI. In exiting and terminating a 

BDI, the FDIC may merge or consolidate 

the BDI with another depository 

institution, issue and sell a majority of 

the capital stock in the BDI, or effect the 

assumption of the deposits or 

acquisition of the assets of the BDI.23

However, many of the same factors that 

challenge the feasibility of a traditional 

P&A transaction also complicate 

planning for the termination of a BDI 

through a sale of the whole entity or its 

constituent parts. The proposed 

guidance would clarify the expectations 

for a firm adopting an MPOE resolution 

strategy with a material entity IDI to 

demonstrate how the IDI can be 

resolved in a manner that is consistent 

with the overall objective of the Plan to 

substantially mitigate the risk that the 

failure of the specified firm would have 

serious adverse effects on financial 

stability in the United States, while also 

adhering to the requirements of the FDI 

Act regarding failed bank resolutions 

without relying on the assumption that 

a systemic risk exception will be 

available. These expectations would not 

be applicable to firms adopting an SPOE 

resolution strategy because U.S. IDI 

subsidiaries of such firms would not be 

expected to enter resolution. 

Question 9: Should the guidance 

indicate that if a specified filer proposes 

a strategy using a BDI to resolve its 

subsidiary material entity IDI, the plan 

should include a detailed description of 

the balance sheet components that 

would transfer to the BDI and of the 

process the specified filer believes is 

most appropriate to value the 

transferred components, inclusive of pro 

forma balance sheet and income 

statements? 

Question 10: Should the guidance 

indicate that if a specified filer proposes 

a strategy using a BDI to resolve its 

subsidiary material entity IDI, the plan 

should describe and quantify: 

• The amounts to be realized through 

liquidating the failed IDI’s assets and 

any expected premiums associated with 

selling the institution’s deposits; 

• Any franchise value bid premiums 

expected to be realized through 

maintaining certain ongoing business 

operations in a BDI; and 

• A comparison of the loss to the DIF 

realized from a payout liquidation and 

from utilizing a BDI so as to support the 

conclusion that a BDI would result in 

the least costly resolution? 

H. Derivatives and Trading Activities 

The agencies request comment on 

whether to provide guidance on 

derivatives and trading activities for 

specified firms that utilize an SPOE 

resolution strategy. Although the 

specified firms have limited derivatives 

and trading operations compared to the 

U.S. GSIBs, it remains important that 

their derivatives and trading activities 

can be stabilized and de-risked during 

resolution without causing significant 

disruption to U.S. markets. If the 

agencies were to provide guidance on 

derivatives and trading activities, the 

agencies likely would adopt aspects of 

the 2019 GSIB Guidance. The agencies 

do not anticipate providing derivatives 

and trading activities guidance to 

specified firms that utilize an MPOE 

resolution strategy. 

In the 2019 GSIB Guidance, the 

agencies specified the particular 

covered companies to which the 

derivatives and trading activities 

guidance was directed. The agencies 

recognize that covered companies may 

move in and out of the triennial full filer 

category and want to ensure that the 

proposal would remain applicable and 

relevant regardless of which covered 

companies are considered triennial full 

filers at any moment in time. 

Question 11: Should the agencies 

provide resolution plan guidance on 

derivatives and trading activities for 

specified firms that utilize an SPOE 

resolution strategy? If so, what should 

be the content of that guidance, what 

methodology should the agencies use to 

determine the scope of specified firms to 

be subject to that guidance, and would 

it be appropriate to adopt all or some of 

the expectations contained in the 2019 

GSIB Guidance? What other derivatives 

and trading activities-related 

expectations would reasonably enhance 

resolution plans that utilize an SPOE 

resolution strategy? 

Question 12: Should the agencies 

provide resolution plan guidance on 

derivatives and trading activities for 

specified firms that utilize an MPOE 

resolution strategy? If so, what should 

be the content of that guidance and 

what methodology should the agencies 

use to determine the scope of specified 

firms to be subject to that guidance? 

I. Format and Structure of Plans; 

Assumptions 

This section states the agencies’ 

preferred presentation regarding the 

format, assumptions, and structure of 

resolution plans. Plans should contain 

an executive summary, a narrative of the 

firm’s resolution strategy, relevant 

technical appendices, and a public 

section as detailed in the Rule. The 

proposed format, structure, and 

assumptions are generally similar to 

those in the 2019 GSIB Guidance, 

except that the proposed guidance 

reflects the expectation that a firm 

should support any assumptions that it 

will have access to the Discount 

Window and/or other borrowings 

during the period immediately prior to 

entering bankruptcy and clarifies 

expectations around such assumptions 

and that firms should not assume the 

use of the systemic risk exception to the 

least-cost test in the event of a failure of 

an IDI requiring resolution under the 

FDI Act. In addition, for firms that adopt 

an MPOE resolution strategy, the 

proposal includes the expectation that a 

plan should demonstrate and describe 

how the failure event(s) results in 

material financial distress, including 

consideration of the likelihood of the 

diminution the firm’s liquidity and 

capital levels prior to bankruptcy. 

Question 13: Certain firms’ plans rely 

on lending facilities, including the 

Discount Window or other governmentsponsored facilities in the period 

immediately preceding a bankruptcy 

filing. Should the guidance include 

additional clarifications related to 

assumptions regarding these lending 

facilities? Should the guidance contain 

clarifications relating to other 

assumptions discussed in the guidance 

or additional appropriate assumptions? 

Question 14: The agencies included in 

the 2019 GSIB Guidance and 2020 FBO 

Guidance answers that had been 

previously published to frequently asked 

questions (FAQs) the agencies received 

from the guidance recipients about the 

topics in resolution plan guidance (e.g., 

capital, liquidity, etc.); however, there 

was no FAQ process for the specified 

firms given the limited number of 

common questions received. Should the 

agencies include in resolution guidance 

for the specified firms answers to FAQs 

similar to those contained in the 2019 

GSIB Guidance and 2020 FBO 

Guidance? If so, which answers to FAQs 

should the final guidance contain, and 

what changes, if any, should the 

agencies make to the answers to FAQs 

in the 2019 GSIB Guidance and 2020 

FBO Guidance? 

III. Paperwork Reduction Act 

Certain provisions of the proposed 

guidance contain ‘‘collections of 

information’’ within the meaning of the 

Paperwork Reduction Act of 1995 (PRA) 

(44 U.S.C. 3501–3521). In accordance 

with the requirements of the PRA, the 

agencies may not conduct or sponsor, 

and a respondent is not required to 

respond to, an information collection 

unless it displays a currently valid 

Office of Management and Budget 

(OMB) control number. The agencies 

reviewed the proposed guidance and 

determined that it would revise the 


ddrumheller on DSK120RN23PROD with NOTICES2
64632 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

24 In addition to the proposed revisions to the 

estimations for Triennial Full filings, the agencies 

have revised the estimation for Biennial Full filings 

from 40,115 hours per response to 39,550 hours per 

response to align the burden estimation 

methodology with what was used for Triennial Full 

filings under the proposed guidance. Specifically, 

the agencies removed a component for a biennial 

full filer’s analysis of its critical operations as part 

of its submission of targeted and full resolution 

plans, because this critical operations analysis is 

integrated in the preparation of such plans. 

reporting revisions that have been 

previously approved by OMB under the 

Board’s OMB control number 7100– 

0346 (Reporting Requirements 

Associated with Regulation QQ; FR QQ) 

and the FDIC’s control number 3064– 

0210 (Reporting Requirements Associate 

with Resolution Planning). The Board 

has reviewed the proposed guidance 

under the authority delegated to the 

Board by OMB. 

Comments are invited on the 

following: 

(A) Whether the collections of 

information are necessary for the proper 

performance of the agencies’ functions, 

including whether the information has 

practical utility; 

(B) the accuracy of the agencies’ 

estimates of the burden of the 

information collections, including the 

validity of the methodology and 

assumptions used; 

(C) ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

(D) ways to minimize the burden of 

the information collections on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology; 

and 

(E) estimates of capital or start-up 

costs and costs of operation, 

maintenance, and purchase of services 

to provide information. 

Comments on aspects of this 

document that may affect reporting, 

recordkeeping, or disclosure 

requirements and burden estimates 

should be sent to the addresses listed in 

the ADDRESSES section of the 

Supplementary Information. A copy of 

the comments may also be submitted to 

the OMB desk officer for the Agencies: 

By mail to U.S. Office of Management 

and Budget, 725 17th Street NW, 

#10235, Washington, DC 20503 or by 

facsimile to (202) 395–5806, Attention, 

Federal Banking Agency Desk Officer. 

Proposed Revisions, With Extension, of 

the Following Information Collections 

Board 

Collection title: Reporting 

Requirements Associated with 

Regulation QQ. 

Collection identifier: FR QQ. 

OMB control number: 7100–0346. 

Frequency: Triennial, Biennial, and 

on occasion. 

Respondents: Bank holding 

companies (including any foreign bank 

or company that is, or is treated as, a 

bank holding company under section 

8(a) of the International Banking Act of 

1978 and meets the relevant total 

consolidated assets threshold) with total 

consolidated assets of $250 billion or 

more, bank holding companies with 

$100 billion or more in total 

consolidated assets with certain 

characteristics, and nonbank financial 

firms designated by the Financial 

Stability Oversight Council for 

supervision by the Board. 

FDIC 

Collection title: Reporting 

Requirements Associated with 

Resolution Planning. 

OMB control number: 3064–0210. 

Current Actions: The proposed 

guidance would apply to all triennial 

full filers, but expectations would differ 

based on whether a firm adopts an 

SPOE or an MPOE resolution strategy 

and whether it is foreign or domestic. 

The proposed guidance is intended to 

clarify the agencies’ expectations 

concerning the resolution plans 

required pursuant to the Rule. The 

document does not have the force and 

effect of law. Rather, it describes the 

agencies’ expectations and priorities 

regarding these the resolution plans of 

triennial full filers and the agencies’ 

general views regarding specific areas 

where additional detail should be 

provided and where certain capabilities 

or optionality should be developed and 

maintained to demonstrate that each 

firm has considered fully, and is able to 

mitigate, obstacles to the successful 

implementation of its preferred 

resolution strategy. 

The proposed guidance for triennial 

full filers using an SPOE strategy is 

based on the 2019 GSIB guidance (for 

domestic firms) and the 2020 FBO 

guidance (for foreign firms). It would 

clarify the agencies’ expectations 

around capital, liquidity, governance 

mechanisms, and operations. The 

proposed guidance also would clarify 

expectations concerning management 

information systems capabilities and the 

identification of discrete separability 

options appropriate to the resolution 

strategy. Additionally, if finalized, the 

foreign banking organizations that adopt 

an SPOE resolution strategy should 

address how their U.S. resolution plan 

aligns with their group resolution plan. 

The proposed guidance for triennial 

full filers using an MPOE resolution 

strategy addresses similar topics but 

reflects the risks of and capabilities 

needed for an MPOE resolution. The 

proposed guidance explains the 

agencies’ expectations around liquidity 

and operational capabilities, and legal 

entity rationalization. The proposed 

guidance also provides clarified 

expectations related to the separate 

resolution of a U.S. IDI and to 

identification of discrete separability 

options. Foreign banking organizations 

that adopt an MPOE resolution strategy 

would have expectations related to 

governance mechanisms; the role of 

branches; and the group resolution plan. 

The proposed guidance does not 

specify expectations around derivatives 

and trading activities. 

Historically, the Board and the FDIC 

have split the respondents for purposes 

of PRA clearances. As such, the agencies 

will split the change in burden as well. 

As a result of this split and the proposed 

revisions, there is a proposed net 

increase in the overall estimated burden 

hours of 13,386 hours for the Board and 

17,610 hours for the FDIC. Therefore, 

the total Board estimated burden for its 

entire information collection would be 

216,853 hours and the total FDIC 

estimate burden for its entire 

information collection would be 

211,300 hours. 

The following table presents only the 

change in the estimated burden hours, 

as amended if the guidance were 

finalized, broken out by agency. The 

table does not include a discussion of 

the remaining estimated burden hours, 

which remain unchanged.24 As shown 

in the table, the Triennial Full filing 

types would be estimated more 

granularly according to SPOE and 

MPOE resolution strategies. 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64633 

1Resolution Plans Required, 76 FR 67323 (Nov. 

1, 2011). 

2Resolution Plans Required, 84 FR 59194 (Nov. 

1, 2019). The amendments became effective 

December 31, 2019. ‘‘Rule’’ means the joint rule as 

amended in 2019. Terms not defined herein have 

the meanings set forth in the Rule. 

3See 12 CFR 243.4(b)(1) and 12 CFR 381.4(b)(1). 

4The terms ‘‘material entities,’’ ‘‘identified 

critical operations,’’ and ‘‘core business lines’’ have 

the same meaning as in the Rule. 

TABLE 1—BURDEN HOUR ESTIMATES UNDER CURRENT REGULATIONS AND UNDER THE PROPOSED GUIDANCE

FR QQ 

Estimated 

number of 

respondents 

Estimated 

annual 

frequency 

Estimated 

average 

hours per 

response 

Estimated 

annual 

burden hours 

Board Burdens 

Current 

Triennial Full: 

Complex Foreign ............................................................................... 1 1 9,777 9,777 

Foreign and Domestic ....................................................................... 7 1 4,667 32,669 

Current Total .............................................................................. ........................ ........................ ........................ 42,446 

Proposed 

Triennial Full: 

FBO SPOE * ...................................................................................... 2 1 11,848 23,696 

FBO MPOE ....................................................................................... 3 1 5,939 17,817 

Domestic MPOE ................................................................................ 3 ........................ 5,513 16,539 

Proposed Total ........................................................................... ........................ ........................ ........................ 58,052 

FDIC Burdens 

Current 

Triennial Full: 

Complex Foreign ............................................................................... 0 1 9,777 0 

Foreign and Domestic ....................................................................... 7 1 4,667 32,669 

Current Total .............................................................................. ........................ ........................ ........................ 32,669 

Proposed 

Triennial Full: 

FBO SPOE * ...................................................................................... 2 1 11,848 23,696 

FBO MPOE ....................................................................................... 3 1 5,939 17,817 

Domestic MPOE ................................................................................ 2 1 5,513 11,026 

Proposed Total ........................................................................... ........................ ........................ ........................ 52,539 

* There are currently no domestic triennial full filers utilizing a SPOE strategy. Estimated hours per response for a domestic SPOE triennial full 

filer would be 11,235 hours. 

Appendix: Text of the Proposed 

Guidance 

Guidance for Resolution Plan 

Submissions of Domestic Triennial Full 

Filers 

I. Introduction 

Section 165(d) of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act 

(12 U.S.C. 5365(d)) requires certain financial 

companies to report periodically to the Board 

of Governors of the Federal Reserve System 

(the Board) and the Federal Deposit 

Insurance Corporation (the FDIC) (together, 

the agencies) their plans for rapid and 

orderly resolution in the event of material 

financial distress or failure. On November 1, 

2011, the agencies promulgated a joint rule 

implementing the provisions of Section 

165(d).1 Subsequently, in November 2019, 

the agencies finalized amendments to the 

joint rule addressing amendments to the 

Dodd-Frank Act made by the Economic 

Growth, Regulatory Relief, and Consumer 

Protection Act and improving certain aspects 

of the joint rule based on the agencies’ 

experience implementing the joint rule since 

its adoption.2 Financial companies meeting 

criteria set out in the Rule must file a 

resolution plan (Plan) according to the 

schedule specified in the Rule. 

This document is intended to provide 

guidance to certain domestic financial 

companies required to submit Plans to assist 

their further development of a Plan for their 

2024 and subsequent Plan submissions. 

Specifically, the guidance applies to any 

domestic covered company that is a triennial 

full filer under the Rule (specified firms).3

The Plan for a specified firm would address 

the subsidiaries and operations that are 

domiciled in the United States as well as the 

foreign subsidiaries, offices, and operations 

of the covered company. 

In general, this document is organized 

around a number of key challenges in 

resolution (capital; liquidity; governance 

mechanisms; operational; legal entity 

rationalization and separability; and insured 

depository institution resolution, if 

applicable) that apply across resolution 

plans, depending on their strategy. 

Additional challenges or obstacles may arise 

based on a firm’s particular structure, 

operations, or resolution strategy. Each firm 

is expected to satisfactorily address these 

vulnerabilities in its Plan. In addition, each 

topic of this guidance is separated into 

expectations for a specified firm that utilizes 

a single point of entry (SPOE) resolution 

strategy for its Plan and expectations for a 

specified firm that utilizes a multiple point 

of entry (MPOE) resolution strategy for its 

Plan. 

Under the Rule, the agencies will review a 

Plan to determine if it satisfactorily addresses 

key potential challenges, including those 

specified below. If the agencies jointly decide 

that an aspect of a Plan presents a weakness 

that individually or in conjunction with 

other aspects could undermine the feasibility 

of the Plan, the agencies may determine 

jointly that the Plan is not credible or would 

not facilitate an orderly resolution under the 

U.S. Bankruptcy Code. 

II. Capital 

SPOE 

The firm should have the capital 

capabilities necessary to execute its 

resolution strategy, including the modeling 

and estimation process described below. 

Resolution Capital Adequacy and 

Positioning (RCAP). In order to help ensure 

that a firm’s material entities 4 could operate 

while the parent company is in bankruptcy, 

the firm should have an adequate amount of 


ddrumheller on DSK120RN23PROD with NOTICES2
64634 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

5The resolution period begins immediately after 

the parent company bankruptcy filing and extends 

through the completion of the preferred resolution 

strategy. 

6 ‘‘Model’’ refers to the set of calculations 

estimating the net liquidity surplus/deficit at each 

legal entity and for the firm in aggregate based on 

assumptions regarding available liquidity, e.g., 

HQLA, and third-party and interaffiliate net 

outflows. 

loss-absorbing capacity to recapitalize those 

material entities. Thus, a firm should have 

outstanding a minimum amount of lossabsorbing capacity, including long-term debt, 

to help ensure that the firm has adequate 

capacity to meet that need at a consolidated 

level (external LAC). 

A firm’s external LAC should be 

complemented by appropriate positioning of 

loss-absorbing capacity within the firm (i.e., 

internal LAC), consistent with any applicable 

rules requiring prepositioned resources at 

IDIs in the form of long-term debt. After 

adhering to any requirements related to 

prepositioning long-term debt at IDIs, the 

positioning of a firm’s remaining resources 

should balance the certainty associated with 

pre-positioning resources directly at material 

entities with the flexibility provided by 

holding recapitalization resources at the 

parent (contributable resources) to meet 

unanticipated losses at material entities. That 

balance should take account of both prepositioning at material entities and holding 

resources at the parent, and the obstacles 

associated with each. With respect to 

material entities that are not U.S. IDIs subject 

to pre-positioned long-term debt 

requirements, the firm should not rely 

exclusively on either full pre-positioning or 

parent contributable resources to recapitalize 

such entities. The Plan should describe the 

positioning of resources within the firm, 

along with analysis supporting such 

positioning. 

Finally, to the extent that pre-positioned 

resources at a material entity are in the form 

of intercompany debt and there are one or 

more entities between that material entity 

and the parent, the firm should structure the 

instruments so as to ensure that the material 

entity can be recapitalized. 

Resolution Capital Execution Need 

(RCEN). To support the execution of the 

firm’s resolution strategy, material entities 

need to be recapitalized to a level that allows 

them to operate or be wound down in an 

orderly manner following the parent 

company’s bankruptcy filing. The firm 

should have a methodology for periodically 

estimating the amount of capital that may be 

needed to support each material entity after 

the bankruptcy filing (RCEN). The firm’s 

positioning of resources should be able to 

support the RCEN estimates. In addition, the 

RCEN estimates should be incorporated into 

the firm’s governance framework to ensure 

that the parent company files for bankruptcy 

at a time that enables execution of the 

preferred strategy. 

The firm’s RCEN methodology should use 

conservative forecasts for losses and riskweighted assets and incorporate estimates of 

potential additional capital needs through 

the resolution period,5 consistent with the 

firm’s resolution strategy. The RCEN 

methodology should be calibrated such that 

recapitalized material entities will have 

sufficient capital to maintain market 

confidence as required under the preferred 

resolution strategy. Capital levels should 

meet or exceed all applicable regulatory 

capital requirements for ‘‘well-capitalized’’ 

status and meet estimated additional capital 

needs throughout resolution. Material 

entities that are not subject to capital 

requirements may be considered sufficiently 

recapitalized when they have achieved 

capital levels typically required to obtain an 

investment-grade credit rating or, if the entity 

is not rated, an equivalent level of financial 

soundness. Finally, the methodology should 

be independently reviewed, consistent with 

the firm’s corporate governance processes 

and controls for the use of models and 

methodologies. 

MPOE 

The agencies do not propose issuing 

guidance on this topic to firms whose Plans 

contemplate a MPOE resolution strategy. 

III. Liquidity 

SPOE 

The firm should have the liquidity 

capabilities necessary to execute its preferred 

resolution strategy. For resolution purposes, 

these capabilities should include having an 

appropriate model and process for estimating 

and maintaining sufficient liquidity at or 

readily available to material entities and a 

methodology for estimating the liquidity 

needed to successfully execute the resolution 

strategy, as described below. 

Resolution Liquidity Adequacy and 

Positioning (RLAP). With respect to RLAP, 

the firm should be able to measure the standalone liquidity position of each material 

entity (including material entities that are 

non-U.S. branches)—i.e., the high-quality 

liquid assets (HQLA) at the material entity 

less net outflows to third parties and 

affiliates—and ensure that liquidity is readily 

available to meet any deficits. The RLAP 

model should cover a period of at least 30 

days and reflect the idiosyncratic liquidity 

profile and risk of the firm. The model 

should balance the reduction in frictions 

associated with holding liquidity directly at 

material entities with the flexibility provided 

by holding HQLA at the parent available to 

meet unanticipated outflows at material 

entities. Thus, the firm should not rely 

exclusively on either full pre-positioning or 

an expected contribution of liquid resources 

from the parent. The model 6 should ensure 

that the parent holding company holds 

sufficient HQLA (inclusive of its deposits at 

the U.S. branch of the lead bank subsidiary) 

to cover the sum of all stand-alone material 

entity net liquidity deficits. The stand-alone 

net liquidity position of each material entity 

(HQLA less net outflows) should be 

measured using the firm’s internal liquidity 

stress test assumptions and should treat 

inter-affiliate exposures in the same manner 

as third-party exposures. For example, an 

overnight unsecured exposure to an affiliate 

should be assumed to mature. Finally, the 

firm should not assume that a net liquidity 

surplus at one material entity could be 

moved to meet net liquidity deficits at other 

material entities or to augment parent 

resources. 

Additionally, the RLAP methodology 

should take into account: (A) the daily 

contractual mismatches between inflows and 

outflows; (B) the daily flows from movement 

of cash and collateral for all inter-affiliate 

transactions; and (C) the daily stressed 

liquidity flows and trapped liquidity as a 

result of actions taken by clients, 

counterparties, key FMUs, and foreign 

supervisors, among others. 

Resolution Liquidity Execution Need 

(RLEN). The firm should have a methodology 

for estimating the liquidity needed after the 

parent’s bankruptcy filing to stabilize the 

surviving material entities and to allow those 

entities to operate post-filing. The RLEN 

estimate should be incorporated into the 

firm’s governance framework to ensure that 

the firm files for bankruptcy in a timely way, 

i.e., prior to the firm’s HQLA falling below 

the RLEN estimate. 

The firm’s RLEN methodology should: 

(A) Estimate the minimum operating 

liquidity (MOL) needed at each material 

entity to ensure those entities could continue 

to operate post-parent’s bankruptcy filing 

and/or to support a wind-down strategy; 

(B) Provide daily cash flow forecasts by 

material entity to support estimation of peak 

funding needs to stabilize each entity under 

resolution; 

(C) Provide a comprehensive breakout of 

all inter-affiliate transactions and 

arrangements that could impact the MOL or 

peak funding needs estimates; and 

(D) Estimate the minimum amount of 

liquidity required at each material entity to 

meet the MOL and peak needs noted above, 

which would inform the firm’s board(s) of 

directors of when they need to take 

resolution-related actions. 

The MOL estimates should capture 

material entities’ intraday liquidity 

requirements, operating expenses, working 

capital needs, and inter-affiliate funding 

frictions to ensure that material entities could 

operate without disruption during the 

resolution. The peak funding needs estimates 

should be projected for each material entity 

and cover the length of time the firm expects 

it would take to stabilize that material entity. 

Inter-affiliate funding frictions should be 

taken into account in the estimation process. 

The firm’s forecasts of MOL and peak 

funding needs should ensure that material 

entities could operate post-filing consistent 

with regulatory requirements, market 

expectations, and the firm’s post-failure 

strategy. These forecasts should inform the 

RLEN estimate, i.e., the minimum amount of 

HQLA required to facilitate the execution of 

the firm’s strategy. The RLEN estimate 

should be tied to the firm’s governance 

mechanisms and be incorporated into the 

playbooks as discussed below to assist the 

board of directors in taking timely resolutionrelated actions. 

MPOE 

The firm should have the liquidity 

capabilities necessary to execute its preferred 

resolution strategy. A Plan with an MPOE 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64635 

7External communications include those with 

U.S. and foreign authorities and other external 

stakeholders, such as large depositors and 

shareholders. 

8 Key pre-filing actions include the preparation of 

any emergency motion required to be decided on 

the first day of the firm’s bankruptcy. 

9A firm is a user of PCS services if it accesses 

PCS services through an agent bank or it uses the 

services of a financial market utility (FMU) through 

its membership in that FMU or through an agent 

bank. A firm is a provider of PCS services if it 

provides PCS services to clients as an agent bank 

or it provides clients with access to an FMU or 

agent bank through the firm’s membership in or 

relationship with that service provider. A firm is 

also a provider if it provides clients with PCS 

services through the firm’s own operations (e.g., 

payment services or custody services). 

10For purposes of this section, a client is an 

individual or entity, including affiliates of the firm, 

to whom the firm provides PCS services and any 

related credit or liquidity offered in connection 

with those services. 

11 In identifying entities as key, examples of 

quantitative criteria may include: for a client, 

transaction volume/value, market value of 

exposures, assets under custody, usage of PCS 

services, and any extension of related intraday 

credit or liquidity; for an FMU, the aggregate 

volumes and values of all transactions processed 

through such FMU; and for an agent bank, assets 

under custody, the value of cash and securities 

settled, and extensions of intraday credit. 

strategy should include analysis and 

projections of a range of liquidity needs 

during resolution, including intraday; reflect 

likely failure and resolution scenarios; and 

consider the guidance on assumptions 

provided in Section VIII, Format and 

Structure of Plans; Assumptions. 

IV. Governance Mechanisms 

SPOE 

Playbooks and Triggers. A firm should 

identify the governance mechanisms that 

would ensure execution of required board 

actions at the appropriate time (as 

anticipated under the firm’s preferred 

strategy) and include pre-action triggers and 

existing agreements for such actions. 

Governance playbooks should detail the 

board and senior management actions 

necessary to facilitate the firm’s preferred 

strategy and to mitigate vulnerabilities, and 

should incorporate the triggers identified 

below. The governance playbooks should 

also include a discussion of: (A) the firm’s 

proposed communications strategy, both 

internal and external; 7 (B) the boards of 

directors’ fiduciary responsibilities and how 

planned actions would be consistent with 

such responsibilities applicable at the time 

actions are expected to be taken; (C) potential 

conflicts of interest, including interlocking 

boards of directors; and (D) any employee 

retention policy. All responsible parties and 

timeframes for action should be identified. 

Governance playbooks should be updated 

periodically for all entities whose boards of 

directors would need to act in advance of the 

commencement of resolution proceedings 

under the firm’s preferred strategy. 

The firm should demonstrate that key 

actions will be taken at the appropriate time 

in order to mitigate financial, operational, 

legal, and regulatory vulnerabilities. To 

ensure that these actions will occur, the firm 

should establish clearly identified triggers 

linked to specific actions for: 

(A) The escalation of information to senior 

management and the board(s) to potentially 

take the corresponding actions at each stage 

of distress leading eventually to the decision 

to file for bankruptcy; 

(B) Successful recapitalization of 

subsidiaries prior to the parent’s filing for 

bankruptcy and funding of such entities 

during the parent company’s bankruptcy to 

the extent the preferred strategy relies on 

such actions or support; and 

(C) The timely execution of a bankruptcy 

filing and related pre-filing actions.8

These triggers should be based, at a 

minimum, on capital, liquidity, and market 

metrics, and should incorporate the firm’s 

methodologies for forecasting the liquidity 

and capital needed to operate as required by 

the preferred strategy following a parent 

company’s bankruptcy filing. Additionally, 

the triggers and related actions should be 

specific. 

Triggers linked to firm actions as 

contemplated by the firm’s preferred strategy 

should identify when and under what 

conditions the firm, including the parent 

company and its material entities, would 

transition from business-as-usual conditions 

to a stress period and from a stress period to 

the recapitalization/resolution periods. 

Corresponding escalation procedures, 

actions, and timeframes should be 

constructed so that breach of the triggers will 

allow prerequisite actions to be completed. 

For example, breach of the triggers needs to 

occur early enough to ensure that resources 

are available and can be downstreamed, if 

anticipated by the firm’s strategy, and with 

adequate time for the preparation of the 

bankruptcy petition and first-day motions, 

necessary stakeholder communications, and 

requisite board actions. Triggers identifying 

the onset of stress and recapitalization/ 

resolution periods, and the associated 

escalation procedures and actions, should be 

discussed directly in the governance 

playbooks. 

Pre-Bankruptcy Parent Support. The Plan 

should include a detailed legal analysis of 

the potential state law and bankruptcy law 

challenges and mitigants to planned 

provision of capital and liquidity to the 

subsidiaries prior to the parent’s bankruptcy 

filing (Support). Specifically, the analysis 

should identify potential legal obstacles and 

explain how the firm would seek to ensure 

that Support would be provided as planned. 

Legal obstacles include claims of fraudulent 

transfer, preference, breach of fiduciary duty, 

and any other applicable legal theory 

identified by the firm. The analysis also 

should include related claims that may 

prevent or delay an effective recapitalization, 

such as equitable claims to enjoin the transfer 

(e.g., imposition of a constructive trust by the 

court). The analysis should apply the actions 

contemplated in the Plan regarding each 

element of the claim, the anticipated timing 

for commencement and resolution of the 

claims, and the extent to which adjudication 

of such claim could affect execution of the 

firm’s preferred resolution strategy. 

The analysis should include mitigants to 

the potential challenges to the planned 

Support. The Plan should identify the 

mitigant(s) to such challenges that the firm 

considers most effective. In identifying 

appropriate mitigants, the firm should 

consider the effectiveness of a contractually 

binding mechanism (CBM), pre-positioning 

of financial resources in material entities, 

and the creation of an intermediate holding 

company. Moreover, if the Plan includes a 

CBM, the firm should consider whether it is 

appropriate that the CBM should have the 

following: 

(A) Clearly defined triggers; 

(B) Triggers that are synchronized to the 

firm’s liquidity and capital methodologies; 

(C) Perfected security interests in specified 

collateral sufficient to fully secure all 

Support obligations on a continuous basis 

(including mechanisms for adjusting the 

amount of collateral as the value of 

obligations under the agreement or collateral 

assets fluctuates); and 

(D) Liquidated damages provisions or other 

features designed to make the CBM more 

enforceable. 

The firm also should consider related 

actions or agreements that may enhance the 

effectiveness of a CBM. A copy of any 

agreement and documents referenced therein 

(e.g., evidence of security interest perfection) 

should be included in the Plan. 

The governance playbooks included in the 

Plan should incorporate any developments 

from the firm’s analysis of potential legal 

challenges regarding the Support, including 

any Support approach(es) the firm has 

implemented. If the firm analyzed and 

addressed an issue noted in this section in 

a prior plan submission, the Plan may 

reproduce that analysis and arguments and 

should build upon it to at least the extent 

described above. In preparing the analysis of 

these issues, firms may consult with law 

firms and other experts on these matters. The 

agencies do not object to appropriate 

collaboration between firms, including 

through trade organizations and with the 

academic community, to develop analysis of 

common legal challenges and available 

mitigants. 

MPOE 

The agencies do not propose issuing 

guidance on this topic to firms whose Plans 

utilize a MPOE resolution strategy. 

V. Operational 

SPOE 

Payment, Clearing, and Settlement 

Activities Framework. Maintaining 

continuity of payment, clearing, and 

settlement (PCS) services is critical for the 

orderly resolution of firms that are either 

users or providers,9 or both, of PCS services. 

A firm should demonstrate capabilities for 

continued access to PCS services essential to 

an orderly resolution through a framework to 

support such access by: 

• Identifying clients,10 FMUs, and agent 

banks as key from the firm’s perspective, 

using both quantitative (volume and value) 11

and qualitative criteria; 

• Mapping material entities, identified 

critical operations, core business lines, and 

key clients to both key FMUs and key agent 

banks; and 


ddrumheller on DSK120RN23PROD with NOTICES2
64636 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

12Examples of potential adverse actions may 

include increased collateral and margin 

requirements and enhanced reporting and 

monitoring. 

13Where a firm is a provider of PCS services 

through the firm’s own operations, the firm is 

expected to produce a playbook for the material 

entities that provide those services, addressing each 

of the items described under ‘‘Content Related to 

Providers of PCS Services,’’ which include 

contingency arrangements to permit the firm’s key 

clients to maintain continued access to PCS 

services. 

14 12 CFR 243.5(e)(12) and 12 CFR 381.5(e)(12). 

15 Id. 

16 12 CFR 252.34(h). 

17 12 CFR 243.5(f)(l)(i) and 12 CFR 381.5(f)(1)(i). 

18 12 CFR 252.34(f). 

19 Id. 

• Developing a playbook for each key FMU 

and key agent bank reflecting the firm’s 

role(s) as a user and/or provider of PCS 

services. 

The framework should address direct 

relationships (e.g., a firm’s direct 

membership in an FMU, a firm’s provision of 

clients with PCS services through its own 

operations, or a firm’s contractual 

relationship with an agent bank) and indirect 

relationships (e.g., a firm’s provision of 

clients with access to the relevant FMU or 

agent bank through the firm’s membership in 

or relationship with that FMU or agent bank). 

Playbooks for Continued Access to PCS 

Services. The firm is expected to provide a 

playbook for each key FMU and key agent 

bank that addresses considerations that 

would assist the firm and its key clients in 

maintaining continued access to PCS services 

in the period leading up to and including the 

firm’s resolution. Each playbook should 

provide analysis of the financial and 

operational impact to the firm’s material 

entities and key clients due to adverse 

actions that may be taken by a key FMU or 

a key agent bank and contingency actions 

that may be taken by the firm. Each playbook 

also should discuss any possible alternative 

arrangements that would allow continued 

access to PCS services for the firm’s material 

entities, identified critical operations and 

core business lines, and key clients, while 

the firm is in resolution. The firm is not 

expected to incorporate a scenario in which 

it loses key FMU or key agent bank access 

into its preferred resolution strategy or its 

RLEN and RCEN estimates. The firm should 

continue to engage with key FMUs, key agent 

banks, and key clients, and playbooks should 

reflect any feedback received during such 

ongoing outreach. 

Content Related to Users of PCS Services. 

Individual key FMU and key agent bank 

playbooks should include: 

• Description of the firm’s relationship as 

a user with the key FMU or key agent bank 

and the identification and mapping of PCS 

services to material entities, identified 

critical operations, and core business lines 

that use those PCS services; 

• Discussion of the potential range of 

adverse actions that may be taken by that key 

FMU or key agent bank when the firm is in 

resolution,12 the operational and financial 

impact of such actions on each material 

entity, and contingency arrangements that 

may be initiated by the firm in response to 

potential adverse actions by the key FMU or 

key agent bank; and 

• Discussion of PCS-related liquidity 

sources and uses in business-as-usual (BAU), 

in stress, and in the resolution period, 

presented by currency type (with U.S. dollar 

equivalent) and by material entity. 

Æ PCS Liquidity Sources: These may 

include the amounts of intraday extensions 

of credit, liquidity buffer, inflows from FMU 

participants, and key client prefunded 

amounts in BAU, in stress, and in the 

resolution period. The playbook also should 

describe intraday credit arrangements (e.g., 

facilities of the key FMU, key agent bank, or 

a central bank) and any similar custodial 

arrangements that allow ready access to a 

firm’s funds for PCS-related key FMU and 

key agent bank obligations (including margin 

requirements) in various currencies, 

including placements of firm liquidity at 

central banks, key FMUs, and key agent 

banks. 

Æ PCS Liquidity Uses: These may include 

firm and key client margin and prefunding 

and intraday extensions of credit, including 

incremental amounts required during 

resolution. 

Æ Intraday Liquidity Inflows and Outflows: 

The playbook should describe the firm’s 

ability to control intraday liquidity inflows 

and outflows and to identify and prioritize 

time-specific payments. The playbook also 

should describe any account features that 

might restrict the firm’s ready access to its 

liquidity sources. 

Content Related to Providers of PCS 

Services.13 Individual key FMU and key 

agent bank playbooks should include: 

• Identification and mapping of PCS 

services to the material entities, identified 

critical operations, and core business lines 

that provide those PCS services, and a 

description of the scale and the way in which 

each provides PCS services; 

• Identification and mapping of PCS 

services to key clients to whom the firm 

provides such PCS services and any related 

credit or liquidity offered in connection with 

such services; 

• Discussion of the potential range of firm 

contingency arrangements available to 

minimize disruption to the provision of PCS 

services to its key clients, including the 

viability of transferring key client activity 

and any related assets, as well as any 

alternative arrangements that would allow 

the firm’s key clients continued access to 

PCS services if the firm could no longer 

provide such access (e.g., due to the firm’s 

loss of key FMU or key agent bank access), 

and the financial and operational impacts of 

such arrangements from the firm’s 

perspective; 

• Descriptions of the range of contingency 

actions that the firm may take concerning its 

provision of intraday credit to key clients, 

including analysis quantifying the potential 

liquidity the firm could generate by taking 

such actions in stress and in the resolution 

period, such as: (i) requiring key clients to 

designate or appropriately pre-position 

liquidity, including through prefunding of 

settlement activity, for PCS-related key FMU 

and key agent bank obligations at specific 

material entities of the firm (e.g., direct 

members of key FMUs) or any similar 

custodial arrangements that allow ready 

access to key clients’ funds for such 

obligations in various currencies; (ii) 

delaying or restricting key client PCS 

activity; and (iii) restricting, imposing 

conditions upon (e.g., requiring collateral), or 

eliminating the provision of intraday credit 

or liquidity to key clients; and 

• Descriptions of how the firm will 

communicate to its key clients the potential 

impacts of implementation of any identified 

contingency arrangements or alternatives, 

including a description of the firm’s 

methodology for determining whether any 

additional communication should be 

provided to some or all key clients (e.g., due 

to the key client’s BAU usage of that access 

and/or related intraday credit or liquidity), 

and the expected timing and form of such 

communication. 

Capabilities. The firm is expected to have 

and describe capabilities to understand, for 

each material entity, the obligations and 

exposures associated with PCS activities, 

including contractual obligations and 

commitments. The firm should be able to: 

• Track the following items by: (i) material 

entity; and (ii) with respect to customers, 

counterparties, and agents and service 

providers, location and jurisdiction: 

Æ PCS activities, with each activity 

mapped to the relevant material entities, 

identified critical operations, and core 

business lines; 14

Æ Customers and counterparties for PCS 

activities, including values and volumes of 

various transaction types, as well as used and 

unused capacity for all lines of credit; 15

Æ Exposures to and volumes transacted 

with FMUs, nostro agents, and custodians; 

and 16

Æ Services provided and service level 

agreements, as applicable, for other current 

agents and service providers (internal and 

external).17

• Assess the potential effects of adverse 

actions by FMUs, nostro agents, custodians, 

and other agents and service providers, 

including suspension or termination of 

membership or services, on the firm’s 

operations and customers and counterparties 

of those operations; 18

• Develop contingency arrangements in 

the event of such adverse actions; 19 and 

• Quantify the liquidity needs and 

operational capacity required to meet all PCS 

obligations, including any change in demand 

for and sources of liquidity needed to meet 

such obligations. 

Managing, Identifying, and Valuing 

Collateral. The firm is expected to have and 

describe its capabilities to manage, identify 

and value the collateral that it receives from 

and posts to external parties and affiliates. 

Specifically, the firm should: 

• Be able to query and provide aggregate 

statistics for all qualified financial contracts 

concerning cross-default clauses, downgrade 

triggers, and other key collateral-related 

contract terms—not just those terms that may 

be impacted in an adverse economic 

environment—across contract types, business 

lines, legal entities, and jurisdictions; 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64637 

20The policy may reference subsidiary or related 

policies already in place, as implementation may 

differ based on business line or other factors. 

21This should be interpreted to include data 

access and intellectual property rights. 

• Be able to track both collateral sources 

(i.e., counterparties that have pledged 

collateral) and uses (i.e., counterparties to 

whom collateral has been pledged) at the 

CUSIP level on at least a t+1 basis; 

• Have robust risk measurements for crossentity and cross-contract netting, including 

consideration of where collateral is held and 

pledged; 

• Be able to identify CUSIP and asset class 

level information on collateral pledged to 

specific central counterparties by legal entity 

on at least a t+1 basis; 

• Be able to track and report on interbranch collateral pledged and received on at 

least a t+1 basis and have clear policies 

explaining the rationale for such inter-branch 

pledges, including any regulatory 

considerations; and 

• Have a comprehensive collateral 

management policy that outlines how the 

firm as a whole approaches collateral and 

serves as a single source for governance.20

Management Information Systems. The 

firm should have the management 

information systems (MIS) capabilities to 

readily produce data on a legal entity basis 

and have controls to ensure data integrity 

and reliability. The firm also should perform 

a detailed analysis of the specific types of 

financial and risk data that would be 

required to execute the preferred resolution 

strategy and how frequently the firm would 

need to produce the information, with the 

appropriate level of granularity. The firm 

should have the capabilities to produce the 

following types of information in a timely 

manner and describe these capabilities in the 

Plan: 

• Financial statements for each material 

entity (at least monthly); 

• External and inter-affiliate credit 

exposures, both on- and off-balance sheet, by 

type of exposure, counterparty, maturity, and 

gross payable and receivable; 

• Gross and net risk positions with 

internal and external counterparties; 

• Guarantees, cross holdings, financial 

commitments and other transactions between 

material entities; 

• Data to facilitate third-party valuation of 

assets and businesses, including risk metrics; 

• Key third-party contracts, including the 

provider, provider’s location, service(s) 

provided, legal entities that are a party to or 

a beneficiary of the contract, and key 

contractual rights (for example, termination 

and change in control clauses); 

• Legal agreement information, including 

parties to the agreement and key terms and 

interdependencies (for example, change in 

control, collateralization, governing law, 

termination events, guarantees, and crossdefault provisions); 

• Service level agreements between 

affiliates, including the service(s) provided, 

the legal entity providing the service, legal 

entities receiving the service, and any 

termination/transferability provisions; 

• Licenses and memberships to all 

exchanges and value transfer networks, 

including FMUs; 

• Key management and support personnel, 

including dual-hatted employees, and any 

associated retention agreements; 

• Agreements and other legal documents 

related to property, including facilities, 

technology systems, software, and 

intellectual property rights. The information 

should include ownership, physical location, 

where the property is managed and names of 

legal entities and lines of business that the 

property supports; and 

• Updated legal records for domestic and 

foreign entities, including entity type and 

purpose (for example, holding company, 

bank, broker dealer, and service entity), 

jurisdiction(s), ownership, and regulator(s). 

Shared and Outsourced Services. The firm 

should maintain a fully actionable 

implementation plan to ensure the continuity 

of shared services that support identified 

critical operations or core business lines and 

robust arrangements to support the 

continuity of shared and outsourced services, 

including, without limitation appropriate 

plans to retain key personnel relevant to the 

execution of the firm’s strategy. For example, 

specified firms should evaluate internal and 

external dependencies and develop 

documented strategies and contingency 

arrangements for the continuity or 

replacement of the shared and outsourced 

services that are necessary to maintain 

identified critical operations or core business 

lines. Examples may include personnel, 

facilities, systems, data warehouses, and 

intellectual property. Specified firms also 

should maintain current cost estimates for 

implementing such strategies and 

contingency arrangements. 

The firm should (A) maintain an 

identification of all shared services that 

support identified critical operations or core 

business lines; 21 (B) maintain a mapping of 

how/where these services support its core 

business lines and identified critical 

operations; (C) incorporate such mapping 

into legal entity rationalization criteria and 

implementation efforts; and (D) mitigate 

identified continuity risks through 

establishment of service-level agreements 

(SLAs) for all shared services that support 

identified critical operations or core business 

lines. 

SLAs should fully describe the services 

provided, reflect pricing considerations on an 

arm’s-length basis where appropriate, and 

incorporate appropriate terms and conditions 

to (A) prevent automatic termination upon 

certain resolution-related events and (B) 

achieve continued provision of such services 

during resolution. The firm should also store 

SLAs in a central repository or repositories 

in a searchable format, develop and 

document contingency strategies and 

arrangements for replacement of critical 

shared services, and complete re-alignment 

or restructuring of activities within its 

corporate structure. In addition, the firm 

should ensure the financial resilience of 

internal shared service providers by 

maintaining working capital for six months 

(or through the period of stabilization as 

required in the firm’s preferred strategy) in 

such entities sufficient to cover contract 

costs, consistent with the preferred 

resolution strategy. 

The firm should identify all critical service 

providers and outsourced services that 

support identified critical operations or core 

business lines and identify any that could not 

be promptly substituted. The firm should (A) 

evaluate the agreements governing these 

services to determine whether there are any 

that could be terminated despite continued 

performance upon the parent’s bankruptcy 

filing, and (B) update contracts to incorporate 

appropriate terms and conditions to prevent 

automatic termination upon commencement 

of any resolution proceeding and facilitate 

continued provision of such services. Relying 

on entities projected to survive during 

resolution to avoid contract termination is 

insufficient to ensure continuity. In the Plan, 

the firm should document the amendment of 

any such agreements governing these 

services. 

Qualified Financial Contracts. The Plan 

should reflect how the early termination of 

qualified financial contracts triggered by the 

parent company’s bankruptcy filing could 

impact the resolution of the firm’s 

operations, including potential termination 

of any contracts that are not subject to 

statutory, contractual or regulatory stays of 

direct default or cross-default rights. A Plan 

should explain and support the firm’s 

strategy for addressing the potential 

disruptive effects in resolution of early 

termination provisions and cross-default 

rights in existing qualified financial contracts 

at both the parent company and material 

entity subsidiaries. This discussion should 

address, to the extent relevant for the firm, 

qualified financial contracts that include 

limitations of standard contractual direct 

default and cross default rights by agreement 

of the parties. 

MPOE 

Payment, Clearing and Settlement (PCS) 

Capabilities. Firms are expected to have and 

describe capabilities to understand, for each 

material entity, its obligations and exposures 

associated with PCS activities, including 

contractual obligations and commitments. 

For example, firms should be able to: 

• As users of PCS services: 

Æ Track the following items by: (i) material 

entity; and (ii) with respect to customers, 

counterparties, and agents and service 

providers, location and jurisdiction: 

D PCS activities, with each activity 

mapped to the relevant material entities, 

identified critical operations, and core 

business lines; 

D Customers and counterparties for PCS 

activities, including values and volumes of 

various transaction types, as well as used and 

unused capacity for all lines of credit; 

D Exposures to and volumes transacted 

with FMUs, nostro agents, and custodians; 

and 

D Services provided and service level 

agreements, as applicable, for other current 

agents and service providers (internal and 

external). 

Æ Assess the potential effects of adverse 

actions by FMUs, nostro agents, custodians, 

and other agents and service providers, 


ddrumheller on DSK120RN23PROD with NOTICES2
64638 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

including suspension or termination of 

membership or services, on the firm and its 

customers and counterparties; 

Æ Develop contingency arrangements in 

the event of such adverse actions; and 

Æ Quantify the liquidity needs and 

operational capacity required to meet all PCS 

obligations, including intraday requirements. 

• As providers of PCS services: 

Æ Identify their PCS clients and the 

services they provide to these clients, 

including volumes and values of 

transactions; 

Æ Quantify and explain time-sensitive 

payments; and 

Æ Quantify and explain intraday credit 

provided. 

Managing, Identifying and Valuing 

Collateral. The firm should have appropriate 

capabilities related to managing, identifying, 

and valuing the collateral that it receives 

from and posts to external parties and its 

affiliates, including tracking collateral 

received, pledged, and available at the CUSIP 

level and measuring exposures. 

Management Information Systems. The 

firm should have the management 

information systems (MIS) capabilities to 

readily produce data on a legal entity basis 

and have controls to ensure data integrity 

and reliability. The firm also should perform 

a detailed analysis of the specific types of 

financial and risk data that would be 

required to execute the preferred resolution 

strategy. The firm should have the 

capabilities to produce the following types of 

information, as appropriate for its resolution 

strategy, in a timely manner and describe 

these capabilities in the Plan: 

• Financial statements for each material 

entity (at least monthly); 

• External and inter-affiliate credit 

exposures, both on- and off-balance sheet, by 

type of exposure, counterparty, maturity, and 

gross payable and receivable; 

• Gross and net risk positions with 

internal and external counterparties; 

• Guarantees, cross holdings, financial 

commitments and other transactions between 

material entities; 

• Data to facilitate third-party valuation of 

assets and businesses, including risk metrics; 

• Key third-party contracts, including the 

provider, provider’s location, service(s) 

provided, legal entities that are a party to or 

a beneficiary of the contract, and key 

contractual rights (for example, termination 

and change in control clauses); 

• Legal agreement information, including 

parties to the agreement and key terms and 

interdependencies (for example, change in 

control, collateralization, governing law, 

termination events, guarantees, and crossdefault provisions); 

• Service level agreements between 

affiliates, including the service(s) provided, 

the legal entity providing the service, legal 

entities receiving the service, and any 

termination/transferability provisions; 

• Licenses and memberships to all 

exchanges and value transfer networks, 

including FMUs; 

• Key management and support personnel, 

including dual-hatted employees, and any 

associated retention agreements; 

• Agreements and other legal documents 

related to property, including facilities, 

technology systems, software, and 

intellectual property rights. The information 

should include ownership, physical location, 

where the property is managed and names of 

legal entities and lines of business that the 

property supports; and 

• Updated legal records for domestic and 

foreign entities, including entity type and 

purpose (for example, holding company, 

bank, broker dealer, and service entity), 

jurisdiction(s), ownership, and regulator(s). 

Shared and Outsourced Services. The firm 

should maintain robust arrangements to 

support the continuity of shared and 

outsourced services that support any 

identified critical operations or are material 

to the execution of the resolution strategy, 

including appropriate plans to retain key 

personnel relevant to the execution of the 

firm’s strategy. For example, specified firms 

should evaluate internal and external 

dependencies and develop documented 

strategies and contingency arrangements for 

the continuity or replacement of the shared 

and outsourced services that are necessary to 

maintain identified critical operations or are 

material to the execution of the resolution 

strategy. Examples may include personnel, 

facilities, systems, data warehouses, and 

intellectual property. Specified firms also 

should maintain current cost estimates for 

implementing such strategies and 

contingency arrangements. 

The firm should: (A) maintain an 

identification of all shared services that 

support identified critical operations or are 

material to the execution of the resolution 

strategy; and (B) mitigate identified 

continuity risks through establishment of 

SLAs for all shared services supporting 

identified critical operations or are material 

to the execution of the resolution strategy. 

SLAs should fully describe the services 

provided and incorporate appropriate terms 

and conditions to: (A) prevent automatic 

termination upon certain resolution-related 

events; and (B) achieve continued provision 

of such services during resolution. 

The firm should identify all critical service 

providers and outsourced services that 

support identified critical operations or are 

material to the execution of the resolution 

strategy. Any of these services that cannot be 

promptly substituted should be identified in 

a firm’s Plan. The firm should: (A) evaluate 

the agreements governing these services to 

determine whether there are any that could 

be terminated despite continued performance 

upon the parent’s bankruptcy filing; and (B) 

update contracts to incorporate appropriate 

terms and conditions to prevent automatic 

termination and facilitate continued 

provision of such services through 

resolution. Relying on entities projected to 

survive during resolution to avoid contract 

termination is insufficient to ensure 

continuity. In the Plan, the firm should 

document the amendment of any such 

agreements governing these services. 

VI. Legal Entity Rationalization & 

Separability 

Legal Entity Rationalization 

SPOE 

Legal Entity Rationalization Criteria (LER 

Criteria). A firm should develop and 

implement legal entity rationalization criteria 

that support the firm’s preferred resolution 

strategy and minimize risk to U.S. financial 

stability in the event of the firm’s failure. LER 

Criteria should consider the best alignment of 

legal entities and business lines to improve 

the firm’s resolvability under different 

market conditions. LER Criteria should 

govern the firm’s corporate structure and 

arrangements between legal entities in a way 

that facilitates the firm’s resolvability as its 

activities, technology, business models, or 

geographic footprint change over time. 

Specifically, application of the criteria 

should: 

(A) Facilitate the recapitalization and 

liquidity support of material entities, as 

required by the firm’s resolution strategy. 

Such criteria should include clean lines of 

ownership, minimal use of multiple 

intermediate holding companies, and clean 

funding pathways between the parent and 

material operating entities; 

(B) Facilitate the sale, transfer, or winddown of certain discrete operations within a 

timeframe that would meaningfully increase 

the likelihood of an orderly resolution of the 

firm, including provisions for the continuity 

of associated services and mitigation of 

financial, operational, and legal challenges to 

separation and disposition; 

(C) Adequately protect the subsidiary 

insured depository institutions from risks 

arising from the activities of any nonbank 

subsidiaries of the firm (other than those that 

are subsidiaries of an insured depository 

institution); and Minimize complexity that 

could impede an orderly resolution and 

minimize redundant and dormant entities. 

These criteria should be built into the 

firm’s ongoing process for creating, 

maintaining, and optimizing its structure and 

operations on a continuous basis. 

MPOE 

Legal Entity Structure. A firm should 

maintain a legal entity structure that supports 

the firm’s preferred resolution strategy and 

minimizes risk to U.S. financial stability in 

the event of the firm’s failure. The firm 

should consider factors such as business 

activities; banking group structures and 

booking models and practices; and potential 

sales, transfers, or wind-downs during 

resolution. The Plan should describe how the 

firm’s legal entity structure aligns core 

business lines and any identified critical 

operations with the firm’s material entities to 

support the firm’s resolution strategy. To the 

extent a material entity IDI relies upon an 

affiliate that is not the IDI’s subsidiary during 

resolution, including for the provision of 

shared services, the firm should discuss its 

rationale for the legal entity structure and 

associated resolution risks and potential 

mitigants. 

The firm’s corporate structure and 

arrangements among legal entities should be 

considered and maintained in a way that 

facilitates the firm’s resolvability as its 

activities, technology, business models, or 

geographic footprint change over time. 

Separability 

SPOE 

Separability. The firm should identify 

discrete operations that could be sold or 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64639 

22See 12 U.S.C. 1823(c)(4)(A)(ii) and 

1821(n)(2)(A). 

23See 12 U.S.C. 1821(d)(11). 

transferred in resolution, with the objective 

of providing optionality in resolution under 

different market conditions. 

A firm’s separability options should be 

actionable, and impediments to their 

execution and projected mitigation strategies 

should be identified in advance. Relevant 

impediments could include, for example, 

legal and regulatory preconditions, 

interconnectivity among the firm’s 

operations, tax consequences, market 

conditions, and other considerations. To be 

actionable, divestiture options should be 

executable within a reasonable period of 

time. 

In developing their options, firms should 

also consider potential consequences for U.S. 

financial stability of executing each option, 

taking into consideration impacts on 

counterparties, creditors, clients, depositors, 

and markets for specific assets. 

Firms should have a comprehensive 

understanding of the entire organization and 

certain baseline capabilities. That 

understanding should include the 

operational and financial linkages among a 

firm’s business lines, material entities, and 

identified critical operations. Additionally, 

information systems should be robust enough 

to produce the required data and information 

needed to execute separability options. 

The level of detail and analysis should 

vary based on the firm’s risk profile and 

scope of operations. A separability analysis 

should address the following elements: 

• Divestiture Options: The options in the 

Plan should be actionable and 

comprehensive, and should include: 

Æ Options contemplating the sale, transfer, 

or disposal of significant assets, portfolios, 

legal entities or business lines. 

Æ Options that may permanently change 

the firm’s structure or business strategy. 

• Execution Plan: For each divestiture 

option listed, the separability analysis should 

describe the steps necessary to execute the 

option. Among other considerations, the 

description should include: 

Æ The identity and position of the senior 

management officials of the company who 

are primarily responsible for overseeing 

execution of the separability option. 

Æ An estimated time frame for 

implementation. 

Æ A description of any impediments to 

execution of the option and mitigation 

strategies to address those impediments. 

Æ A description of the assumptions 

underpinning the option. 

Æ A plan describing the methods and 

forms of communication with internal, 

external, and regulatory stakeholders. 

• Impact Assessment: The separability 

analysis should holistically consider and 

describe the expected impact of individual 

divestiture options. This should include the 

following for each divestiture option: 

Æ A financial impact assessment that 

describes the impact of executing the option 

on the firm’s capital, liquidity, and balance 

sheet. 

Æ A business impact assessment that 

describes the effect of executing the option 

on business lines and material entities, 

including reputational impact. 

Æ An identified critical operation impact 

assessment that describes how execution of 

the option may affect the provision of any 

identified critical operation. 

Æ An operational impact assessment and 

contingency plan that explains how 

operations can be maintained if the option is 

implemented; such an analysis should 

address internal operations (for example, 

shared services, IT requirements, and human 

resources) and access to market infrastructure 

(for example, clearing and settlement 

facilities and payment systems). 

Further, the firm should have, and be able 

to demonstrate, the capability to populate in 

a timely manner a data room with 

information pertinent to a potential 

divestiture of the business (including, but not 

limited to, carve-out financial statements, 

valuation analysis, and a legal risk 

assessment). 

Within the Plan, the firm should 

demonstrate how the firm’s LER Criteria and 

implementation efforts support meeting the 

separability-related guidance above. The Plan 

should also provide the separability analysis 

noted above. Finally, the Plan should include 

a description of the firm’s legal entity 

rationalization governance process. 

MPOE 

A Plan should include options for the sale, 

transfer, or disposal of significant assets, 

portfolios, legal entities, or business lines in 

resolution that may be executed in a 

reasonable period of time. For each option, 

supporting analysis should include: an 

execution plan that includes an estimated 

time frame for implementation, a description 

of any impediments to execution of the 

option, and mitigation strategies to address 

those impediments; a description of the 

assumptions underpinning the option; a 

financial impact assessment that describes 

the impact of executing the option; and an 

identified critical operation impact 

assessment that describes how execution of 

the option may affect the provision of any 

identified critical operation. Information 

systems should be robust enough to produce 

the required data and information needed to 

execute the options. 

VII. Insured Depository Institution (IDI) 

Resolution 

MPOE 

If the Plan includes a strategy that 

contemplates the separate resolution of a U.S. 

IDI that is a material entity, the Plan should 

demonstrate how this could be achieved in 

a manner that is consistent with the overall 

objective of the Plan to substantially mitigate 

the risk that the failure of the specified firm 

would have serious adverse effects on 

financial stability in the United States while 

also complying with the statutory and 

regulatory requirements governing IDI 

resolution. More specifically, 

• If the strategy is other than payout 

liquidation (e.g., a bridge depository 

institution (BDI)), the Plan should provide 

information supporting the feasibility of this 

strategy. Under the FDI Act, the FDIC 

generally would complete a least-cost 

analysis when resolving a failed bank at the 

time of entry into resolution. A Plan may use 

an approach such as one of the following in 

lieu of performing a complete least-cost 

analysis to demonstrate the feasibility of the 

proposed strategy.22

Æ A Plan may demonstrate that a strategy 

involving an all-deposit BDI would be 

permissible under the least-cost test of the 

FDI Act by presenting an analysis which 

shows that the strategy results in no loss to 

the Deposit Insurance Fund (DIF) by 

demonstrating that the incremental estimated 

cost to the DIF by having the BDI assume all 

uninsured deposits is offset by the 

preservation of franchise value connected to 

the uninsured deposits after accounting for 

the amount of any loss-absorbing debt 

instruments and other liabilities subordinate 

to the depositor class that would be left 

behind in the receivership. 

Æ A Plan may demonstrate the feasibility 

of a strategy involving a BDI that assumes all 

insured deposits and a portion of uninsured 

deposits by providing an advance dividend 

to uninsured depositors for a portion of their 

deposit claim, as well as the basis for that 

dividend, and pursuant to which a loss to the 

DIF occurs, by presenting an analysis 

comparing the cost of the proposed strategy 

to the cost of payout liquidation and 

demonstrating: 

D The incremental estimated cost to the 

DIF created by the BDI’s assumption of the 

portion of uninsured deposits assumed is 

offset by the franchise value preserved by 

maintaining the assumed uninsured deposits, 

after accounting for the amount of any longterm debt and other liabilities subordinate to 

the depositor class that would be left behind 

in the receivership; 23 and 

D The loss to the DIF under the proposed 

strategy (including the amounts paid by the 

DIF for more favorable treatment, relative to 

a payout liquidation, of a portion of 

uninsured deposits) is less than or equal to 

the loss to the DIF that would be incurred 

through a payout liquidation of the IDI; and 

Æ The deposit payout process for any 

uninsured deposits that remain in the 

receivership may be executed in a manner 

that substantially mitigates the risk of serious 

adverse effects on U.S. financial stability. 

• If the Plan’s strategy envisions a payout 

liquidation for the IDI, with or without use 

of a Deposit Insurance National Bank or a 

paying agent, the Plan should demonstrate 

how the deposit payout and asset liquidation 

process would be executed in a manner that 

substantially mitigates the risk of serious 

adverse effects on U.S. financial stability. 

• In all cases, the Plan should show that 

implementation of the resolution, including 

the impact on depositors whose accounts are 

not transferred in whole or in part to the BDI, 

would not create the risk of serious adverse 

effects on U.S. financial stability. 

Regardless of the IDI resolution strategy 

chosen, the Plan should assume asset 

valuations consistent with the severely 

adverse stress economic scenario and the 

IDI’s condition as a failed institution, as 

referenced in ‘‘Guidance regarding 

Assumptions,’’ Items 4 and 7 below. The 

Plan, in light of such conditions, should 

explain the process for determining asset or 


ddrumheller on DSK120RN23PROD with NOTICES2
64640 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

24 12 CFR 243.4(a)(4)(ii) and 12 CFR 

381.4(a)(4)(ii). 

25See Section 11(c)(5) of the FDI Act, codified at 

11 U.S.C. 1821(c)(5), which details grounds for 

appointing the FDIC as conservator or receiver of 

an IDI. 

business franchise values, including 

providing detailed supporting descriptions 

such as references to historical pricing, 

benchmarks, or recognized models; evidence 

supporting client attrition rates; and other 

relevant information. 

With respect to exit from IDI resolution 

proceedings, a Plan could support the 

feasibility of an asset liquidation or BDI exit 

strategy by, for example, describing an 

actionable process, based on historical 

precedent or otherwise supportable 

projections, that winds down certain 

businesses, includes the sale of assets and 

deposits to multiple acquirers, or culminates 

in a capital markets transaction, such as an 

initial public offering or a private placement 

of securities. 

VIII. Format and Structure of Plans; 

Assumptions 

SPOE & MPOE 

Format of Plan 

Executive Summary. The Plan should 

contain an executive summary consistent 

with the Rule, which must include, among 

other things, a concise description of the key 

elements of the firm’s strategy for an orderly 

resolution. In addition, the executive 

summary should include a discussion of the 

firm’s assessment of any impediments to the 

firm’s resolution strategy and its execution, 

as well as the steps it has taken to address 

any identified impediments. 

Narrative. The Plan should include a 

strategic analysis consistent with the Rule. 

This analysis should take the form of a 

concise narrative that enhances the 

readability and understanding of the firm’s 

discussion of its strategy for an orderly 

resolution in bankruptcy or other applicable 

insolvency regimes (Narrative). 

Appendices. The Plan should contain a 

sufficient level of detail and analysis to 

substantiate and support the strategy 

described in the Narrative. Such detail and 

analysis should be included in appendices 

that are distinct from and clearly referenced 

in the related parts of the Narrative 

(Appendices). 

Public Section. The Plan must be divided 

into a public section and a confidential 

section consistent with the requirements of 

the Rule. 

Other Informational Requirements. The 

Plan must comply with all other 

informational requirements of the Rule. The 

firm may incorporate by reference previously 

submitted information as provided in the 

Rule. 

Guidance Regarding Assumptions 

1. The Plan should be based on the current 

state of the applicable legal and policy 

frameworks. Pending legislation or regulatory 

actions may be discussed as additional 

considerations. 

2. The firm must submit a Plan that does 

not rely on the provision of extraordinary 

support by the United States or any other 

government to the firm or its subsidiaries to 

prevent the failure of the firm.24 The firm 

should not submit a Plan that assumes the 

use of the systemic risk exception to the 

least-cost test in the event of a failure of an 

IDI requiring resolution under the FDI Act. 

3. The firm should not assume that it will 

be able to sell identified critical operations or 

core business lines, or that unsecured 

funding will be available immediately prior 

to filing for bankruptcy. 

4. The resolution strategy may be based on 

an idiosyncratic event or action, including a 

series of compounding events. The firm 

should justify use of that assumption, 

consistent with the conditions of the 

economic scenario. 

5. Within the context of the applicable 

idiosyncratic scenario, markets are 

functioning and competitors are in a position 

to take on business. If a firm’s Plan assumes 

the sale of assets, the firm should take into 

account all issues surrounding its ability to 

sell in market conditions present in the 

applicable economic condition at the time of 

sale (i.e., the firm should take into 

consideration the size and scale of its 

operations as well as issues of separation and 

transfer.). 

6. For a firm that adopts an MPOE strategy, 

the Plan should demonstrate and describe 

how the failure event(s) results in material 

financial distress.25 In particular, the Plan 

should consider the likelihood that there 

would be a diminution of the firm’s liquidity 

buffer in the stress period prior to filing for 

bankruptcy from high unexpected outflows 

of deposits and increased liquidity 

requirements from counterparties. Though 

the immediate failure event may be liquidityrelated and associated with a lack of market 

confidence in the financial condition of the 

covered company or its material legal entity 

subsidiaries prior to the final recognition of 

losses, the demonstration and description of 

material financial distress may also include 

depletion of capital. Therefore, the Plan 

should also consider the likelihood of the 

depletion of capital. 

7. The firm should not assume any waivers 

of section 23A or 23B of the Federal Reserve 

Act in connection with the actions proposed 

to be taken prior to or in resolution. 

8. The Plan should support any 

assumptions that the firm will have access to 

the Discount Window and/or other 

borrowings during the period immediately 

prior to entering bankruptcy. To the extent 

the firm assumes use of the Discount 

Window and/or other borrowings, the Plan 

should support that assumption with a 

discussion of the operational testing 

conducted to facilitate access in a stress 

environment, placement of collateral, and the 

amount of funding accessible to the firm. The 

firm may assume that its depository 

institutions will have access to the Discount 

Window only for a few days after the point 

of failure to facilitate orderly resolution. 

However, the firm should not assume its 

subsidiary depository institutions will have 

access to the Discount Window while 

critically undercapitalized, in FDIC 

receivership, or operating as a bridge bank, 

nor should it assume any lending from a 

Federal Reserve credit facility to a non-bank 

affiliate. 

Financial Statements and Projections. The 

Plan should include the actual balance sheet 

for each material entity and the consolidating 

balance sheet adjustments between material 

entities as well as pro forma balance sheets 

for each material entity at the point of failure 

and at key junctures in the execution of the 

resolution strategy. It should also include 

statements of projected sources and uses of 

funds for the interim periods. The pro forma 

financial statements and accompanying notes 

in the Plan must clearly evidence the failure 

trigger event; the Plan’s assumptions; and 

any transactions that are critical to the 

execution of the Plan’s preferred strategy, 

such as recapitalizations, the creation of new 

legal entities, transfers of assets, and asset 

sales and unwinds. 

Material Entities. Material entities should 

encompass those entities, including foreign 

offices and branches, which are significant to 

the maintenance of an identified critical 

operation or core business line. If the abrupt 

disruption or cessation of a core business line 

might have systemic consequences to U.S. 

financial stability, the entities essential to the 

continuation of such core business line 

should be considered for material entity 

designation. Material entities should include 

the following types of entities: 

1. Any U.S.-based or non-U.S. affiliates, 

including any branches, that are significant 

to the activities of an identified critical 

operation. 

2. Subsidiaries or foreign offices whose 

provision or support of global treasury 

operations, funding, or liquidity activities 

(inclusive of intercompany transactions) is 

significant to the activities of an identified 

critical operation. 

3. Subsidiaries or foreign offices that 

provide material operational support in 

resolution (key personnel, information 

technology, data centers, real estate or other 

shared services) to the activities of an 

identified critical operation. 

4. Subsidiaries or foreign offices that are 

engaged in derivatives booking activity that 

is significant to the activities of an identified 

critical operation, including those that 

conduct either the internal hedge side or the 

client-facing side of a transaction. 

5. Subsidiaries or foreign offices engaged in 

asset custody or asset management that are 

significant to the activities of an identified 

critical operation. 

6. Subsidiaries or foreign offices holding 

licenses or memberships in clearinghouses, 

exchanges, or other FMUs that are significant 

to the activities of an identified critical 

operation. 

For each material entity (including a 

branch), the Plan should enumerate, on a 

jurisdiction-by-jurisdiction basis, the specific 

mandatory and discretionary actions or 

forbearances that regulatory and resolution 

authorities would take during resolution, 

including any regulatory filings and 

notifications that would be required as part 

of the preferred strategy, and explain how the 

Plan addresses the actions and forbearances. 

Describe the consequences for the covered 

company’s resolution strategy if specific 


ddrumheller on DSK120RN23PROD with NOTICES2
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64641 

actions in a non-U.S. jurisdiction were not 

taken, delayed, or forgone, as relevant. 

IX. Public Section 

SPOE & MPOE 

The purpose of the public section is to 

inform the public’s understanding of the 

firm’s resolution strategy and how it works. 

The public section should discuss the steps 

that the firm is taking to improve 

resolvability under the U.S. Bankruptcy 

Code. The public section should provide 

background information on each material 

entity and should be enhanced by including 

the firm’s rationale for designating material 

entities. The public section should also 

discuss, at a high level, the firm’s intra-group 

financial and operational interconnectedness 

(including the types of guarantees or support 

obligations in place that could impact the 

execution of the firm’s strategy). 

The discussion of strategy in the public 

section should broadly explain how the firm 

has addressed any deficiencies, 

shortcomings, and other key vulnerabilities 

that the agencies have identified in prior plan 

submissions. For each material entity, it 

should be clear how the strategy provides for 

continuity, transfer, or orderly wind-down of 

the entity and its operations. There should 

also be a description of the resulting 

organization upon completion of the 

resolution process. 

The public section may note that the Plan 

is not binding on a bankruptcy court or other 

resolution authority and that the proposed 

failure scenario and associated assumptions 

are hypothetical and do not necessarily 

reflect an event or events to which the firm 

is or may become subject. 

By order of the Board of Governors of the 

Federal Reserve System. 

Ann E. Misback, 

Secretary of the Board. 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on August 29, 

2023. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2023–19267 Filed 9–18–23; 8:45 am] 

BILLING CODE 6210–01–6714–01–P 

FEDERAL RESERVE SYSTEM 

[Docket No. OP–1817] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

RIN 3064–ZA38 

Guidance for Resolution Plan 

Submissions of Foreign Triennial Full 

Filers 

AGENCY: Board of Governors of the 

Federal Reserve System (Board) and 

Federal Deposit Insurance Corporation 

(FDIC). 

ACTION: Proposed guidance; request for 

comments. 

SUMMARY: The Board and the FDIC 

(together, the agencies) are inviting 

comments on proposed guidance for the 

2024 and subsequent resolution plan 

submissions by certain foreign banking 

organizations. The proposed guidance is 

meant to assist these firms in 

developing their resolution plans, 

which are required to be submitted 

pursuant to the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, as 

amended (the Dodd-Frank Act), and the 

jointly issued implementing regulation 

(the Rule). The scope of application of 

the proposed guidance would be 

foreign-based triennial full filers 

(specified firms or firms), which are 

foreign-based Category II and III banking 

organizations, and the guidance, if 

finalized, would supersede the joint 

Guidance for Resolution Plan 

Submissions of Certain Foreign-Based 

Covered Companies (85 FR 83557 (Dec. 

22, 2020) (2020 FBO Guidance)). The 

proposed guidance is based on the 

agencies’ review of the specified firms’ 

2021 and prior resolution plan 

submissions, as well as the agencies’ 

experiences dealing with stress events 

in the international and domestic 

banking systems, and would describe 

the agencies’ expectations regarding 

several aspects of the specified firms’ 

plans for an orderly resolution under 

the U.S. Bankruptcy Code. The agencies 

invite public comment on all aspects of 

the proposed guidance. 

DATES: Comments must be received by 

November 30, 2023. 

ADDRESSES: Interested parties are 

encouraged to submit written comments 

jointly to both agencies. Comments 

should be directed to: 

Board: You may submit comments, 

identified by Docket No. OP–1817, by 

any of the following methods: 

• Agency Website: http://

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Email: regs.comments@

federalreserve.gov. Include docket 

number in the subject line of the 

message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Ann E. Misback, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. 

In general, all public comments will 

be made available on the Board’s 

website at www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm as 

submitted, and will not be modified to 

remove confidential, contact or any 

identifiable information. Public 

comments may also be viewed 

electronically or in paper in Room M– 

4365A, 2001 C St. NW, Washington, DC 

20551, between 9:00 a.m. and 5:00 p.m. 

during federal business weekdays. 

FDIC: You may submit comments, 

identified by RIN 3064–ZA38, by any of 

the following methods: 

• FDIC Website: https://

www.fdic.gov/resources/regulations/ 

federal-register-publications/. Follow 

the instructions for submitting 

comments on the FDIC’s website. 

• Email: comments@fdic.gov. Include 

‘‘RIN 3064–ZA38’’ on the subject line of 

the message. 

• Mail: James P. Sheesley, Assistant 

Executive Secretary, Attention: 

Comments—RIN 3064–ZA38, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery/Courier: Comments 

may be hand delivered to the guard 

station at the rear of the 550 17th Street 

NW building (located on F Street NW) 

on business days between 7 a.m. and 5 

p.m. 

Public Inspection: Comments 

received, including any personal 

information provided, may be posted 

without change to https://www.fdic.gov/ 

resources/regulations/federal-registerpublications/. Commenters should 

submit only information that the 

commenter wishes to make available 

publicly. The FDIC may review, redact, 

or refrain from posting all or any portion 

of any comment that it may deem to be 

inappropriate for publication, such as 

irrelevant or obscene material. The FDIC 

may post only a single representative 

example of identical or substantially 

identical comments, and in such cases 

will generally identify the number of 

identical or substantially identical 

comments represented by the posted 

example. All comments that have been 

redacted, as well as those that have not 

been posted, that contain comments on 

the merits of this document will be 

retained in the public comment file and 

will be considered as required under all 

applicable laws. All comments may be 

accessible under the Freedom of 

Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Board: Catherine Tilford, Deputy 

Associate Director, (202) 452–5240, 

Elizabeth MacDonald, Assistant 

Director, (202) 475–6316, Tudor Rus, 

Lead Financial Institution Analyst, (202) 

475–6359, Division of Supervision and 

Regulation; or Jay Schwarz, Assistant 

General Counsel, (202) 452–2970; 

Andrew Hartlage, Special Counsel, (202) 

452–6483; Sarah Podrygula, Senior 

Attorney, (202) 912–4658; or Brian 


ddrumheller on DSK120RN23PROD with NOTICES2