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Wells Fargo, three other banks publish living wills

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Prudential regulators published the living wills of four mega banks, giving the public a glimpse at how the firms would be dissolved in the event of a major financial crisis or corporate failure.

The four banks with resolutions due to the Federal Reserve and Federal Deposit Insurance Corp. this week, included BNP Paribas (BNP), HSBC Holdings (HSB), Royal Bank of Scotland Group (RBS) and Wells Fargo & Co (WFC).

These banks are known to have assets valued somewhere between $100 billion and $250 billion – large enough to be systemically important to the entire banking system and big enough to fall under the numerous Dodd-Frank Act provisions. One of the law's key provisions forces banks to provide regulators with living wills explaining how they’d wind down in a crisis scenario.

The Wells Fargo plan suggests the bank would put its parent company through Chapter 11 bankruptcy in a crisis scenario, while the Wells Fargo Bank-National Association banking unit would go into receivership under the umbrella of the Federal Deposit Insurance Corp.

In addition, under the guidance of the Securities Investor Protection Act of 1970, Wells Fargo Securities, First Clearing and Wells Fargo Advisors would be liquidated.

"That liquidation may take the form of a simple transfer or liquidation of customer accounts, or a sale of assets on a piecemeal basis by the SIPA trustee," Wells Fargo wrote in its plan.

The remaining units — Wells Fargo Funds Management, Wells Capital Management Inc. and Galliard Capital Management — would be pushed through a Chapter 11 reorganization, with a focus on finding purchasers for the units.

Click here to read more about the resolution plans.

 

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