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Regulators release 'living will' breakup plans from big banks

July 03, 2012|By Jim Puzzanghera
  • Pedestrians walk past a Citibank branch while a man cycles past in Tokyo in 2011. Citibank was one of nine large banks to submit "living wills" to U.S. regulators this week.
Pedestrians walk past a Citibank branch while a man cycles past in Tokyo… (Tomohiro Ohsumi/Bloomberg…)

WASHINGTON -- Regulators on Tuesday released shortened public versions of breakup plans known as "living wills" that the nine largest banks were required to submit so the government could safely shut them down if they were in danger of collapsing.

The resolution plans were required by the 2010 Dodd-Frank financial reform law to prevent the chaos that swept through the financial system when Lehman Bros. failed in September 2008. Banks with more than $250 billion in non-bank assets were the first financial institutions required to submit the plans to the Federal Reserve and the Federal Deposit Insurance Corp., which will review them.

The first set of plans were due Monday and contained public and confidential portions. Regulators released the public sections Tuesday from the nine banks: Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS.

The public portions of the plans ranged from 14 to 42 pages long and largely detail each bank's previously stated financial information and provide other information, such as describing their core businesses lines and foreign operations. The plans then give a "high-level description" of each bank's strategy should it teeter near bankruptcy.

Citibank, for example, said it would replace its senior management and board of directors, and under one option would try to have its parent company, Citigroup, recapitalize the bank. Citigroup would then file for reorganization under Chapter 11 of the bankruptcy code.

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