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US banking regulators said Friday that they had identified weaknesses in the bankruptcy plans of half of America's largest banks, warning this raised questions about their feasibility.
Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase all had a "shortcoming" in their resolution plans, also known as "living wills", which detail their bankruptcy plans in the event of failure or "material financial distress," the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) said in a statement.
The FDIC went even further than the Fed in its analysis of Citigroup's plans, considering them to contain a "deficiency" which could undermine the plan's feasibility.
Under the rules of the review, because the two agencies did not agree on Citigroup's living will, it remains listed as a "shortcoming", meaning that it does not need to submit a new plan immediately.
But it still raises questions about the bankruptcy plans at the US banking giant, which was the only US lender out of the eight considered to be global systemically important banks (G-SIBs) that was found to have shortcomings during the previous review, published in 2022.
Under the terms of the resolution plan review, the four US G-SIBs identified must address their shortcomings in the next resolution plans, due by July 1, 2025.