Ring-Fenced

In response to the breakdown in cooperation between international financial supervisors and policy makers since the crisis, supervisors globally have sought to ring-fence local operations of the once free-roaming global bank, and to regulate and supervise these local operations much more aggressively.

This has posed a significant challenge for Board members, particularly those of national US banks and Bank Holding Companies (BHCs) subject to Federal Reserve’s annual CCAR. As of July 1^st, The Federal Reserve’s Enhanced Prudential Standards requires Foreign Banking Organizations (FBOs) to create newly ring-fenced Intermediate Holding Companies (IHCs) – and IHC Boards must meet these higher expectations too.

In this paper, Ring-Fenced: 14 Success Factors for IHC Board Governance, we address the issues created by the IHC structure required for large FBOs in the US, particularly for the FBOs that have not been operating under a BHC structure already, and provide suggested solutions to overcome the challenges.

Authors:
Ross Eaton – Principal in the Americas Finance & Risk Practice
Peter Reynolds – Partner in the Americas Finance & Risk Practice