By Chris Wack

The Federal Deposit Insurance Corp. and Federal Reserve Board said on Friday that they have identified a weakness in the resolution plans from Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase.

The agencies said they didn't identify any weaknesses in the plans from the other banks, following their joint review of the July 2023 resolution plan submissions from the eight largest and most complex banks.

The other four banks were State Street, Wells Fargo, Bank of New York Mellon, and Morgan Stanley.

Resolution plans, also known as living wills, must describe a bank's strategy for orderly resolution in bankruptcy in the event of material financial distress or failure. The agencies have jointly determined that each weakness identified in the 2023 plans from Bank of America, Goldman Sachs, and JPMorgan Chase is a "shortcoming." A shortcoming is a weakness that raises questions about the feasibility of the plan.

The agencies jointly identified a weakness in the 2023 plan submitted by Citigroup, but reached different conclusions on its severity. The FDIC determined that the Citigroup plan isn't credible or wouldn't facilitate an orderly resolution under the U.S. Bankruptcy Code and considers the weakness to be a "deficiency." A deficiency is a weakness that could undermine the feasibility of the plan.

The agencies also previously identified a shortcoming in Citigroup's 2021 plan related to data quality and data management, and that shortcoming remains outstanding.

The agencies said they have provided feedback letters to each of the eight banks that identify areas for continued development of banks' resolution strategies and capabilities.

The shortcomings are to be addressed in the next resolution plans due by July 1, 2025. The feedback letters also specify that each bank, in its 2025 resolution plan submission, should address the topics of contingency planning and obtaining foreign government actions necessary to execute the resolution strategy.

Write to Chris Wack at

(END) Dow Jones Newswires

06-21-24 1258ET