Foreign Firms Making Case for ‘Mini’ Living Wills
By Joe Adler
Living wills aren’t just for the most well-known banks anymore. Several relatively obscure foreign institutions with a small footprint in the United States are being asked to map out their hypothetical failure. Banks like Caixa Geral de Depositos, a state-owned Portuguese bank with a roughly $300 million-asset branch in New York, and Monte dei Paschi di Siena, an Italian institution with a $650 million-asset branch in the U.S., are required to file living wills by yearend. Karen Shaw Petrou, managing partner of Federal Financial Analytics, noted that U.S. branches of foreign banks utilize funding advantages through the Fed Reserve system, and their U.S. branches are increasingly providing funding help to their foreign-based parent companies, instead of vice versa. “The home country resolution regime, if any, is almost always structurally … different than the Dodd-Frank network. A lot of the banks are small in the United States but still really important back home where their bank system may be highly concentrated,” she said.