December 20, 2018 / 9:31 PM / a month ago

UPDATE 1-U.S. bank regulators sign off on 'living wills' for foreign banks

 (Adds industry background, regulatory details)
    By Pete Schroeder
    WASHINGTON, Dec 20 (Reuters) - U.S. banking regulators
announced on Thursday they had signed off on "living wills" for
four foreign banks - Barclays          , Credit Suisse         ,
Deutsche Bank            and UBS          - detailing how they
could safely be dissolved in a crisis.
    The Federal Reserve and Federal Deposit Insurance
Corporation said the resolution plans submitted by the banks had
some shortcomings, but nothing significant enough to demand
stricter rules or additional restrictions on bank activity.
    Specifically, the regulators said the banks needed to
improve their communications between U.S. operations and foreign
parents in times of stress. Separately, Credit Suisse was told
it needs to improve how it estimates the liquidity needs of its
U.S. intermediate holding company.
    The banks must address these concerns in their next
resolution plan submissions, due on July 1, 2020.
    The regulators noted the firms have become smaller and less
risky since the 2007-2009 financial crisis, making it easier to
dissolve them if necessary.
    Banks have been required to submit "living wills" as part of
stricter rules established after the 2007-2009 crisis. The
plans, which must be regularly reviewed by regulators, are aimed
at ensuring large banks can be safely wound down without
endangering the entire financial system.
    The resolution plans, commonly known as living wills,
require large banks to detail how they could be unwound in cases
of bankruptcy without disrupting the broader financial system.
If regulators do not find a plan credible, they could impose
restrictions on a bank’s activities or even order it to divest.
   Previously, banks with more than $50 billion in assets have
been required to submit plans annually, although regulators have
frequently granted extensions in the past. A new bank
deregulation law enacted in 2018 directs regulators to require
such plans from banks with more than $250 billion in assets,
while giving regulators discretion to require plans from smaller
banks of at least $100 billion in assets.

 (Reporting by Pete Schroeder in Washington
Editing by Diane Craft and Matthew Lewis)
  
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