Background
First issued in 2012, the Federal Deposit Insurance Corporation’s (FDIC) Insured Depository Institution (IDI) Resolution Plan rule requires banks with over $50 billion in total assets (covered IDIs) to periodically submit resolution plans to provide the FDIC with information about the bank that is essential to effective resolution planning and to support the execution of a resolution, if necessary. The original Rule required covered IDIs to develop and submit detailed plans demonstrating how they could be resolved in an orderly and timely manner in the event of receivership. The FDIC published a proposed amended rule in the Federal Register on September 19, 2023 and carefully considered all comments received in finalizing the rule.
The FDIC Board voted to finalize a rule that modifies the 2012 rule, codified at 12 CFR § 360.10.
Final amended rule
The final amended rule strengthens the current resolution plan rule to support the FDIC’s resolution readiness in the event of material distress and failure of large IDIs. Key elements of the final rule include:
- IDIs with $100 billion or more in average total assets (Group A) will submit resolution plans, while IDIs with total assets at least $50 but less than $100 billion in average total assets (Group B) will submit more limited informational filings. Each covered IDIs will provide the FDIC with critical information and analysis to assist in its potential resolution.
- Covered IDIs in Group A are required to submit a comprehensive strategy (Identified Strategy) from the point of their potential failure to liquidation or return of the ownership interests to the private sector. The Identified Strategy would likely use a default approach whereby the FDIC, as receiver of the failed institution, operates the institution under a bridge bank although this approach would not be required.
- The requirement of an Identified Strategy does not apply to the informational filings of Group B covered IDIs. Discussions of valuation approaches and certain strategy related components of the Franchise Components content requirement are also not required in informational filings.
- Most covered IDIs will file their respective resolution plans or informational filings triennially starting in 2025 and provide limited interim supplements in off-years.
- Covered IDIs affiliated with U.S. global systemically important banking organizations will file their resolution plans biennially starting in 2026. The expectation is that these covered IDIs will alternate filing their resolution plans under Section 165(d) of the Dodd-Frank Act and resolution plans under the final amended rule on an annual basis.
- The final amended rule enhances and clarifies the criteria for the assessment of the credibility of all resolution submissions and the FDIC’s approach to feedback.
- All covered IDIs would be required to demonstrate capabilities to market the covered IDI and its assets, such as the capability to furnish timely key reports identified in the submission and promptly establish a virtual due diligence data room and populate it with information necessary for interested parties to submit well-informed bids.
- The FDIC would expect all covered IDIs to engage with the agency to assess and test their resolution capabilities, including those that ensure the continuation of critical banking services and the potential marketing of the franchise or its components.