The Financial Stability Oversight Council today voted to de-designate Zions Bank as a systemically important financial institution as the bank merges with its holding company. With $66.4 billion in assets, the Salt Lake City-based bank was the smallest bank subject to regulation as a SIFI.
“Zions engages in limited capital markets activities, presents minimal fire sale risks, uses a simple operational structure, and is subject to extensive regulation and supervision,” said Treasury Secretary Steven Mnuchin, who chairs FSOC. “The council determined that there is not a significant risk that Zions could pose a threat to U.S. financial stability, and I am pleased that the council used its authority to promote regulatory efficiency.”
In 2015 congressional testimony, Zions Chairman and CEO Harris Simmons jokingly described his bank as “the itty-bitty SIFI” but noted that being over the arbitrary $50 billion asset threshold cost hundreds of millions of dollars in terms of software, technology platforms and outside services, plus having to hire nearly 500 full-time compliance, risk and audit professionals.
Certain depository institutions without holding companies but with more than $50 billion in assets are not designated as SIFIs, but former SIFIs that shed their holding companies must petition to lose the SIFI status under Section 117 of the Dodd-Frank Act. Under the S. 2155 regulatory reform law, the $50 billion threshold was shifted to $250 billion, and the Federal Reserve was given authority to apply tailored prudential requirements to banks with assets of $100-250 billion.