Prudential Financial, which was termed as “too big to fail” aftermath of the financial crisis by the regulators, has been declared no longer systemically important financial institution by the Financial Stability Oversight Council (FSOC).
Under Dodd-Frank rule, Prudential as well as MetLife and American International Group (AIG) were categorised as a systemically important financial institution (SIFI) in 2013.
These SIFI were deemed as threats to US financial stability and the US regulators feared that their failure might trigger a financial crisis.
AIG was stripped of SIFI tag in October last year while the MetLife was relived in January this year.
Now, Prudential will not be subjected to strict capital requirements and disclosures as well as stricter oversight by the Federal Reserve.
Treasury Secretary Steven Mnuchin said: “The Council’s decision today follows extensive engagement with the company and a detailed analysis showing that there is not a significant risk that the company could pose a threat to financial stability.The Council has continued to act decisively to remove any designation that is not warranted.”
Commenting on the FSOC decision, Prudential said: “We are pleased with this decision, which affirms our longstanding belief that Prudential never met the standard for designation.
“This outcome reflects Prudential’s sustainable business model, capital strength and comprehensive risk management, which have and continue to enable us to fulfill our promises to our customers, deliver consistent performance and meet regulatory obligations.”
The insurer further stated that it will continue to work with regulators to improve and boost the FSOC’s processes and other measures to help address potential risks to financial stability.