SPOE Recap Method GROUP STRUCTURE BEFORE RECAPITALIZATION Public shareholders G-SIFI / FHC Deposits / Equity Advances Equity Advances Equity Advances 25 10 10 10 10 25 Parent Only Balance Sheet US Broker- Foreign Broker- Domestic Bank Dealer Dealer Deposits / advances to 45 Unsecured long-term 50 subs debt Equity in subs 45 Unsecured short-term 5 debt Other assets 10 Secured liabilities 0 Total 100 Other liabilities 0 Foreign Equity 45 Branch Total 100 0
SPOE Recap Method HYPOTHETICAL LOSSES Public shareholders G-SIFI / FHC Deposits / Equity Advances Equity Advances Equity Advances 25 5 10 10 2 10 10 2 25 Parent Only Balance Sheet US Broker- Foreign Broker- Domestic Bank Dealer Dealer Deposits / advances to 45 Unsecured long-term 50 subs debt Equity in subs 9 Unsecured short-term 0 debt Other assets 5 Secured liabilities 0 Total 59 Other liabilities 0 Foreign Equity 9 Branch Total 59 1
SPOE Recap Method STEP 1: RECAPITALIZING BUSINESS TRANSFERRED TO BRIDGE HOLDCO Claims left behind Failed G-SIFI / FHC Bridge FHC in receivership All assets, Long-term debt: 50 including shares Equity: 9 in subsidiaries (Plus guarantees, unsecured short- Deposits / Equity Advances Equity Advances Equity term debt and Advances 5 10 2 10 2 25 secured liabilities, if any) Receivership Balance Sheet Equity of Bridge FHC 59 Unsecured long-term 50 US Broker- Foreign Broker- Domestic Bank debt Dealer Dealer Total 59 Equity 9 Total 59 Kept out of FDIA Kept out of insolvency Kept out of insolvency receivership proceeding proceeding proceeding Bridge FHC Balance Sheet Deposits / advances to 45 Liabilities 0 subs Foreign Equity in subs 9 Equity 59 Branch Other assets 5 Total 59 Kept out of insolvency Total 59 proceeding 2
SPOE Recap Method STEP 2: RECAPITALIZING OPERATING SUBSIDIARIES Convert debt to equity at operating subsidiaries Claims left behind Failed G-SIFI / FHC Bridge FHC in receivership Long-term debt: 50 Equity: 9 Deposits / Equity Advances Equity Advances Equity Advances 5 25 10 2 2 10 10 2 2 10 25 5 Receivership Balance Sheet Equity of Bridge FHC 59 Unsecured long-term 50 US Broker- Foreign Broker- Domestic Bank debt Dealer Dealer Total 59 Equity 9 Total 59 Bridge FHC Balance Sheet Deposits / advances to subs 9 Liabilities 0 Foreign Equity in subs 45 Equity 59 Branch Other assets 5 Total 59 Total 59 3
SPOE Recap Method STEP 3: DISTRIBUTION OF EQUITY IN SATISFACTION OF CLAIMS o Unsecured long-term debt Claimants claimants receive Bridge Shares in Bridge FHC FHC shares worth 50 in distributed to left-behind satisfaction of their claim claimants in satisfaction for 50 of claims in accordance o Equity: 0 with priority claims Failed G-SIFI / FHC Bridge FHC in receivership Deposits / Equity Advances Equity Advances Equity Advances 25 2 10 2 10 5 1 Receivership Balance Sheet (Revalued) Equity of Bridge FHC 50 Unsecured long-term 50 debt US Broker- Foreign Broker- Domestic Bank Dealer Dealer Total 50 Equity 0 Total 50 Kept out of FDIA Kept out of insolvency Kept out of insolvency receivership proceeding proceeding proceeding Bridge FHC Balance Sheet (Revalued) Deposits / advances to 5 Liabilities 0 subs Foreign Branch Equity in subs 45 Equity 50 Other assets 0 Total 50 Kept out of insolvency proceeding Total 50 4
SPOE Recap Method STEP 4: TERMINATION OF BRIDGE STATUS New shareholders (Old debt holders) Bridge FHC Failed G-SIFI / FHC converts into New FHC in receivership New FHC Deposits / Equity Advances Equity Advances Equity Advances 25 2 10 2 10 1 New FHC Balance Sheet US Broker- Foreign Broker- Deposits / advances to subs 5 Liabilities 0 Domestic Bank Dealer Dealer Equity in subs 45 Equity 50 Other assets 0 Total 50 Total 50 Foreign Branch 5
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