Prudential de-designation ushers in new era for Sifis

Author: John Crabb | Published: 26 Oct 2018

The Financial Stability Oversight Council’s (FSOC) decision to de-designate insurance, investment management and financial services company Prudential as a systemically important financial institution (Sifi) opens the door for the organisation to redefine how it looks at both banking and non-banking institutions that could threaten the health of the US financial system.

The October 16 decision meant that Prudential was the final of the four non-banking organisations to be designated as Sifis between 2013 and 2014 to have the title removed, after GE, MetLife and American International. The FSOC 'rescinded its final determination that material financial distress at Prudential could pose a threat to US financial stability and that Prudential shall be supervised by the Board of Governors and be subject to enhanced prudential standards’.

Acting under the recommendation of Treasury secretary Steven Mnuchin, who released a report in April 2017 suggesting Treasury review Sifis related to non-bank financial companies,...