FDIC Approves Final Guidance to Enhance Resolution Planning at Large Banks

WASHINGTON – The Federal Deposit Insurance Corporation (FDIC) Board of Directors approved final joint guidance to help certain large banks further develop their resolution plans.  The final guidance is largely similar to the proposed guidance from August 2023 and incorporates some changes in response to comments received.  The FDIC developed the guidance jointly with the Federal Reserve.  These resolution plans, also known as living wills, describe a bank’s strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure. 

The guidance generally applies to domestic and foreign banks with more than $250 billion in total assets but that are not the largest and most complex banks, for which guidance is already in place.  The guidance addresses the specific characteristics of, and risks posed by, this group of banks. 

The guidance is organized around key areas of potential vulnerability, such as capital, liquidity, and operational capabilities that could be needed in resolution.  Distinct from the guidance to the largest and most complex banks, this guidance provides agency expectations for both single point of entry and multiple point of entry resolution strategies, which are different strategies banks have adopted for their rapid and orderly resolution.  It also recognizes that the preferred resolution outcome for foreign banks is often a successful home country-led resolution and guides foreign banks on how to address the global resolution plan in their U.S. plan. 

The agencies also announced that they are extending the resolution plan submission deadline for the banks to which the guidance applies.  Banks will be required to submit their resolution plans by October 1, 2025, instead of March 31, 2025.  The purpose of the extension is to provide reasonable time for banks to consider the final guidance as they develop their plan submissions.