What is a resolution plan, and why is it important for BK?

A resolution plan, also known as a 'living will,' is a document that large financial institutions must submit to regulators outlining how they could be resolved in an orderly manner during a severe financial crisis without causing systemic disruption. It's crucial for BK as a systemically important institution because regulators' assessment of its credibility directly impacts operational freedom and potential regulatory penalties.

What are the potential consequences if BK fails to fix its resolution plan?

If BK fails to adequately address the identified deficiencies by October 1, 2016, the Federal Reserve and FDIC could impose more stringent capital, leverage, or liquidity requirements. They could also place restrictions on BK's growth, activities, or operations. Persistent failure to remedy deficiencies could lead to mandatory divestitures of assets or operations.

What is the difference between 'deficiencies' and 'shortcomings' mentioned in the filing?

Deficiencies are more critical issues that require immediate attention and remediation by a firm deadline (October 1, 2016, in this case). Shortcomings are less severe but still need to be addressed in future plans (BK's 2017 resolution plan, due July 1, 2017). While deficiencies pose an immediate risk of regulatory action, shortcomings also carry the risk of the next plan being deemed not credible if not adequately addressed.

Does this mean BK is in immediate financial danger?

This filing does not indicate immediate financial danger but highlights a regulatory compliance issue. The plan's lack of credibility means regulators believe BK hasn't sufficiently planned for a potential orderly wind-down. The potential consequences, such as increased capital requirements or operational restrictions, could impact profitability and strategic flexibility in the future if not resolved.

Bank of New York Mellon Corp 8-K SEC Disclosure

Summary

This 8-K filing from Bank of New York Mellon Corporation (BK) reports on the determination by the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System regarding its 2015 resolution plan. The agencies found the plan not credible and identified deficiencies and shortcomings that require remediation. Investors should note that failure to address these issues by the specified deadlines could lead to significant regulatory actions, including more stringent capital and liquidity requirements, restrictions on growth and operations, or even asset divestitures. The primary focus for investors is the potential regulatory impact and the company's plan to rectify the situation. While the company has until October 1, 2016, to address deficiencies and July 1, 2017, for shortcomings, any further non-compliance could materially affect BK's operational flexibility and financial standing. The company has attached a news release providing further details on this matter.

Key Highlights

1BK's 2015 resolution plan was deemed not credible by the FDIC and Federal Reserve.
2The regulators identified specific deficiencies and shortcomings in the plan.
3Deficiencies must be addressed by October 1, 2016; shortcomings by July 1, 2017.
4Failure to remedy deficiencies could result in stricter capital, leverage, or liquidity requirements.
5Regulatory actions could include restrictions on BK's growth, activities, or operations.
6Persistent non-compliance could force the divestiture of assets or operations.
7A news release from BK regarding this matter is attached as an exhibit.

Bank of New York Mellon Corp 8-K Report, Corporate Update (Apr 14, 2016)

Summary

Key Highlights

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