FDIC Issues Guidance for Large Bank Resolution Plan Submissions

The Federal Deposit Insurance Corporation ("FDIC") issued guidance regarding the submission of resolution plans to the agency by insured depository institutions with assets greater than $50 billion. Covered institutions are required to provide resolution plans that would enable the FDIC, as receiver under the Federal Deposit Insurance Act, to resolve the institutions, in the event of their failure. The intention is to resolve the institution in an orderly manner to ensure that depositors are given prompt access to insured deposits, maximized returns from the failed institution's assets, and minimized losses realized by creditors and the Deposit Insurance Fund.

Under the guidance, covered institutions must describe at least one strategy that involves the separation and sale of the institution's deposit franchise, core business lines and/or major assets to multiple acquirers, in addition to a second strategy that involves the liquidation of the firm, including a payout of insured deposits. To assist institutions in writing their plans, the guidance provides clarification regarding permissible assumptions and significant obstacles to the most orderly and least costly resolution that must be addressed within the plans.

See: FDIC Guidance.