Embedding Recovery and Resolution Planning into U.S. Financial Services

The U.S. regulatory landscape is shifting quickly. Regulators are demanding more frequent, more detailed, and more testable recovery and resolution plans to ensure financial stability in times of stress. 

• The OCC has lowered its recovery planning threshold to $100B, requiring annual stress tests and compliance with stringent testing provisions.
• The FDIC is tightening expectations on IDI resolution plans, requiring triennial or biennial filings depending on asset size, with interim submissions for banks above $100B.
• Under Section 165(d), the FDIC and Federal Reserve require biennial resolution plans from institutions above $250B, while GSIBs must file annually. 

For large banks and foreign banking organizations (FBOs) operating in the U.S., the implications are clear: greater operational readiness and stronger governance are no longer optional, they are mandatory. 

Recovery plans act as the first line of defense, helping banks respond decisively to severe stress events. Under the OCC framework, covered institutions – typically those with at least $100 billion in total consolidated assets – must maintain compliant plans by January 1, 2026, or within 12 months of becoming a covered institution.  

These plans must define: 

• Triggers and escalation procedures to identify stress early.
• Recovery options such as asset sales, capital actions, or business line adjustments.
• Governance structures ensuring timely decision-making.
• Communication strategies for internal and external stakeholders. 

Timeline: 

• Newly covered banks: submit recovery plans and comply with testing by January 1, 2026 (12–24 months depending on provision).
• Existing covered banks: amend recovery plans and comply with testing by June 1, 2026. 

Unlike traditional contingency plans, recovery plans emphasize decision readiness – ensuring management can act quickly and confidently when stress indicators emerge. 

Administered jointly by the Federal Reserve and the FDIC, 165(d) resolution plans apply to: 

• US bank holding companies with $250 billion or more in total consolidated assets; and
• Foreign banking organizations with $250 billion or more in global assets and $100 billion or more in U.S. non-branch assets.  

These plans describe how a firm’s parent organization and subsidiaries could be resolved under the U.S. Bankruptcy Code without destabilizing the financial system. Plan type, submission frequency, and regulatory expectations vary by the size and complexity of the institution.  

Scope & Frequency: 

• Institutions ≥ $250B: Biennial resolution plans (alternating full and targeted).
• GSIBs: Annual resolution plans (alternating full and targeted). 

These plans must show how a firm could be quickly resolved in crisis without disrupting the broader financial system. 

The FDIC’s IDI resolution plan requirement applies separately to insured depository institutions with $50 billion or more in total consolidated assets. Unlike the 165(d) plans, which focus on holding company resolution, IDI plans outline how the bank itself could be resolved under the Federal Deposit Insurance Act, enabling the FDIC to act as receiver if necessary. 

IDI plans must address:  

• Organizational structure and critical business lines of the bank.
• Core deposit and payment activities critical to customers and the financial system.
• Operational continuity for systems, personnel, and vendors.
• Information systems essential for resolution execution.
• Identification of impediments to a rapid and orderly resolution. 

The IDI and 165(d) plans are complementary but distinct. While the 165(d) plan focuses on the parent company and overall group resolvability, the IDI plan provides an operational roadmap for the bank-level resolution. Both are assessed independently by the FDIC, though coordination between submissions is expected.  

Navigating these layered requirements requires more than compliance it requires strategy. At Sia, we deliver tailored Recovery & Resolution Planning (RRP) solutions aligned to each client’s regulatory scope and strategic objectives. 

We help clients strengthen resilience through: 

• Governance & oversight: Clear roles, responsibilities, and escalation frameworks.
• Operational readiness: Stress testing, playbooks, and decision-making protocols.
• Scenario design: Realistic, testable scenarios aligned with supervisory expectations.
• Documentation & validation: Robust reporting to withstand regulatory scrutiny. 

For U.S. institutions, the challenge is significant but so is the opportunity. By embedding recovery and resolution planning into broader business strategy, banks can: 

• Strengthen resilience against shocks.
• Build trust with regulators and stakeholders.
• Protect long-term competitiveness. 

Recovery and resolution planning should not be viewed as a regulatory burden. Done well, it is a strategic enabler of stability, resilience, and growth.