GRIMY TIMES EXCLUSIVE: The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) have delivered a major blow to two global banking giants, revealing significant flaws in their resolution plans. Credit Suisse AG and BNP Paribas have come under fire for inadequate strategies to handle potential financial distress or failure.
Credit Suisse’s 2021 resolution plan has been flagged for two critical deficiencies: cash flow forecasting capabilities and governance issues within its U.S. operations. The FDIC and Federal Reserve are demanding a revised plan by May 31, 2023, to address these weaknesses. Furthermore, the bank must demonstrate improved cash flow forecasting in its next submission due by July 2024.
In addition to Credit Suisse, BNP Paribas has been cited for shortcomings related to the continuity of its U.S. securities repurchase agreement activity. The agencies have outlined specific weaknesses and required actions for the French bank to rectify these issues.
The agencies noted that no other banking organizations’ plans were found wanting in this review. However, they anticipate issuing new guidance to assist large banking institutions in enhancing their resolution plans, as previously announced in September.
This latest development underscores the rigorous oversight being applied to financial institutions’ ability to handle potential crises, ensuring stability and trust within the global financial system.
For more information, contact David Barr at (202) 898-6993. Last Updated: December 16, 2022
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