A study by the New York Federal Reserve has revealed growing
complexity in the way banks maintain foreign subsidiaries, but
not a corresponding increase in risk.
The number of legal layers between a bank
subsidiary and its top holder has expanded from three in the
1990 to an average of five in 2014. According to data from the
National Information Center (NIC), the largest
separation between a US bank and a bank subsidiary was 16
layers, and 19 for a non-bank subsidiary.
The trend appears to counter
regulators’ desire for banks to simplify their
internal structures and make clear, straightforward living wills.
"Regulators are leaning on banks to get cleaner
structures," said Shearman & Sterling of counsel Donald
This pressure stems from too big to...