FDIC inks information-sharing deal with EU’s resolution board

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WASHINGTON — The Federal Deposit Insurance Corp. has forged a pact with the European Union-based entity that handles failed-bank cleanups to share information and collaborate on planning for cross-border resolutions.

The “cooperation arrangement” with the European Banking Union’s Single Resolution Board is similar to information-sharing agreements the FDIC reached with other jurisdictions after the U.S. regulator was granted broad powers under the Dodd-Frank Act to resolve failing financial behemoths.

“Cooperation among resolution authorities is important to help ensure that Global Systemically Important Banks (GSIBs) can fail without major systemic consequences,” the FDIC and SRB said in a joint press release. “Bilateral arrangements signed between resolution authorities to underpin this cooperation are an important ingredient for building resolvability together and for advance planning for resolution.”

The SRB, which was created along with the European Banking Union to coordinate activities for EU nations, is essentially the FDIC’s equivalent on resolution planning in the eurozone.

“The FDIC and SRB express, through this CA, their willingness to cooperate with each other in the interest of fulfilling their respective statutory objectives; enhancing communication and cooperation; assisting each other in the planning and the conduct of an orderly Resolution of a Firm; and maintaining confidence and financial stability in the United States and the European Banking Union,” the agreement says.

Yet the document also says that the arrangement “does not create any legally binding obligations, confer any rights, modify or supersede any domestic laws, or restrict the Authorities in the exercise of their statutory powers and functions.”

The agreement envisions “ongoing cooperation and communication through periodic and ad hoc consultations” and that cooperation between the FDIC and SRB would pick up as the financial condition of a global firm worsened.

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