Regulators Approve Smaller Banks' 'Wills' -- WSJ
March 25 2017 - 3:02AM
Dow Jones News
By Ryan Tracy
WASHINGTON -- U.S. regulators gave 15 regional banks a passing
grade on their "living will" plans for bankruptcy, a victory win
for those firms that demonstrates how their regulatory environment
is significantly less stressful than for the largest U.S.
banks.
The verdicts from the Federal Reserve and Federal Deposit
Insurance Corp. mean regional banks -- including U.S. Bancorp, PNC
Financial Services Group Inc. and Capital One Financial Corp. --
have for the moment satisfied regulators that they have feasible
plans for going through bankruptcy without needing a taxpayer
bailout.
The plans, known as "living wills," are required under the 2010
Dodd-Frank financial law. The exercise is significant for banks
because if regulators don't approve of them, sanctions such as
higher capital requirements or forced breakups can be imposed. This
is the first time regulators have issued a judgment about regional
banks' plans. The firms will have to continue submitting updated
plans in the future.
The one exception Friday was Northern Trust Corp. Regulators
said they concluded that firm has "a number of shortcomings" in its
living will, related to the funding and internal services available
to keep the firm operating during a bankruptcy. They required the
firm to address the perceived shortcomings by the end of this
year.
A Northern Trust spokesman said the bank "maintains a strong
financial position" and has been making improvements since it
originally submitted its living will to regulators. "We look
forward to working with the Federal Deposit Insurance Corporation
and the Federal Reserve Board and remain dedicated to advancing our
resolution planning efforts," the spokesman said in a written
statement.
The positive verdict for the regional banks stands in contrast
to the treatment regulators have given eight of the largest U.S.
banks, including industry titans such as J.P. Morgan Chase &
Co. and Bank of America Corp. Those firms are much larger and more
complex than regional banks and have had a harder time convincing
regulators that they could fail without taxpayer help.
In April 2016, the Fed and FDIC concluded all eight of those
firms had shortcomings in their plans, and saw problems so severe
in five of the firms that they said the plans didn't meet the
Dodd-Frank standard.
In December 2016, regulators said most of those firms had
addressed their concerns. They also said Wells Fargo & Co.
hadn't , and restricted some of the firm's business activities.
Wells Fargo was given until March to remedy regulators' concerns.
All eight of the big banks must file new living wills this
summer.
Also on Friday, regulators gave four large foreign-owned banks
guidance about how to improve their "living wills," but didn't
render a verdict on the plans.
Those firms will have until July 2018 to conform plans to the
guidance. The foreign-owned firms are Barclays PLC, Credit Suisse,
Deutsche Bank AG and UBS Group AG.
Write to Ryan Tracy at ryan.tracy@wsj.com
(END) Dow Jones Newswires
March 25, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Capital One Financial (NYSE:COF)
Historical Stock Chart
From Aug 2024 to Sep 2024
Capital One Financial (NYSE:COF)
Historical Stock Chart
From Sep 2023 to Sep 2024