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BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

DIVISION OF BANKING
SUPERVISION AND REGULATION

SR 14-1
January 24, 2014
TO THE OFFICER IN CHARGE OF SUPERVISION
AT EACH FEDERAL RESERVE BANK AND CERTAIN LARGE DOMESTIC
BANK HOLDING COMPANIES
SUBJECT: Heightened Supervisory Expectations for Recovery and Resolution
Preparedness for Certain Large Bank Holding Companies - Supplemental Guidance on
Consolidated Supervision Framework for Large Financial Institutions (SR letter 12-17/CA
letter 12-14)
Applicability: This guidance only applies to eight domestic bank holding companies that may
pose elevated risk to U.S. financial stability.
As a supplement to SR letter 12-17/CA letter 12-14, “Consolidated Supervision
Framework for Large Financial Institutions,” the Federal Reserve is issuing this letter to clarify
the heightened supervisory expectations for recovery and resolution preparedness for the
eight domestic bank holding companies 1 that may pose elevated risk to U.S. financial stability.
The letter’s attachment provides detailed information regarding the capabilities that a bank
holding company subject to this guidance should maintain for effective recovery or resolution
preparedness. 2 However, the list of capabilities in this letter should not be viewed as exhaustive.
Additional practices for effective recovery and resolution preparedness, beyond those contained
in this letter, may be appropriate for a particular bank holding company. The Federal Reserve
plans to incorporate reviews of key capabilities for recovery and resolution preparedness in its
ongoing supervisory work for each bank holding company subject to this guidance.
Heightened Supervisory Expectations for Certain Bank Holding Companies
Through horizontal comparisons, Federal Reserve supervisory staff has observed a range
of capabilities which are critical to certain large bank holding companies’ operational resilience
1

These eight companies are Bank of America Corporation, Bank of New York Mellon Corporation, PLC, Citigroup
Inc., Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, and Wells
Fargo & Company.

2

This guidance applies immediately to all domestic bank holding companies that filed initial resolution plans on or
before July 1, 2012 (all bank holding companies listed in footnote 1 except Wells Fargo & Company). For Wells
Fargo & Company, which submitted its initial resolution plan on July 1, 2013, this guidance applies on July 1, 2014.
Refer to the Board’s Regulation QQ (12 CFR 243) – “Resolution Plans.”
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and contingency planning in circumstances where capital and liquidity buffers are strained and to
the resiliency of the financial system as a whole. Specifically, a bank holding company subject
to this guidance should have:
•

Effective processes for managing, identifying, and valuing collateral it receives from
and posts to external parties and affiliates;

•

A comprehensive understanding of obligations and exposures associated with
payment, clearing, and settlement activities;

•

The ability to analyze funding sources, uses, and risks of each material entity and
critical operation, including how these entities and operations may be affected under
stress;

•

Demonstrated management information systems capabilities for producing certain
key data on a legal entity basis that is readily retrievable and controls in place to
ensure data integrity and reliability; and

•

Robust arrangements in place for the continued provision of shared or outsourced
services needed to maintain critical operations that are documented and supported by
legal and operational frameworks.

The attachment to this letter provides additional information on the practices that a bank
holding company subject to this guidance should have in place to support robust recovery and
resolution preparedness. As indicated in SR 12-17/CA 12-14, additional supervisory and
operational guidance will be developed in the future to further clarify supervisory expectations
around recovery and resolution preparedness for all large financial institutions.
Federal Reserve Banks should distribute this letter to bank holding companies subject to
this guidance and to appropriate supervisory staff. Questions regarding this guidance may be
directed to Molly Mahar, Adviser, at (202) 973-7360 and Catherine Piché, Assistant Director, at
(202) 452-3793. In addition, questions may be sent via the Board’s public website. 3

Michael S. Gibson
Director
Attachment:
•

Principles and Practices for Recovery and Resolution Preparedness

Cross-References:

3

•

Board’s Regulation QQ (12 CFR 243) -- “Resolution Plans”

•

SR letter 12-17/CA letter 12-14, “Consolidated Supervision Framework for Large
Financial Institutions”

http://www.federalreserve.gov/apps/contactus/feedback.aspx.
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