Fed study reveals greater complexity in US banks

Author: Zoe Thomas | Published: 1 Sep 2015

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 Lamson.

This pressure stems from too big to...