Expanding coverage to include $100B banks and consideration of financial and non-financial risks
KPMG Regulatory Insights
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October 2024
The Office of the Comptroller of the Currency (OCC) issues a final rule amending its recovery planning guidelines (Guidelines), which are generally applicable to insured national banks, federal savings associations, and federal branches of foreign banks (collectively, covered banks) meeting or exceeding a certain total assets threshold. The final amendments are substantively as proposed earlier this year, with modifications based on comments received, including clarification that the testing requirement should be risk-based, and extension of the relevant compliance dates.
Effective, January 1, 2025, the final amendments to the Guidelines:
Key features of the amended OCC Guidelines require each covered bank to develop and maintain a recovery plan that is specific to that covered bank and appropriate for its individual size, risk profile, activities, and complexity, including the complexity of its organizational and legal entity structure. The plan should consider both financial risk and non-financial risk (including operational and strategic risk), and include the following elements:
Recover Plan Elements | Description |
---|---|
Overview | Overall organizational and legal entity structure, including its material entities, critical operations, core business lines, core management information systems, and interconnections and interdependencies. |
Triggers | Financial and non-financial triggers that reflect the bank's specific vulnerabilities. |
Options for Recovery | A range of credible options, including execution and timing, to restore financial strength and viability, thereby allowing the bank to continue to operate as a going concern and to avoid liquidation or resolution. |
Impact Assessments | For each recovery option, assessment, and description of effects, including implications for capital, liquidity, funding, profitability, material entities, critical operations, core business lines, risk profile as well as potential legal, market, or regulatory obstacles. |
Escalation Procedures | Process for escalating decision-making to senior management or the board of directors in response to the breach of any trigger. |
Management Reports | Reporting sufficient data and information to senior management or board to make timely decisions regarding the appropriate actions necessary to respond to the breach of a trigger. |
Communications Procedures | Process for notifying OCC about significant trigger breaches and actions taken; internal and external communication processes. |
Other | Any additional information communicated in writing by the OCC regarding the bank's recovery plan. |
Compliance with the final Guideines requires:
Recovery Planning: OCC Final Rule
Expanding coverage to include $100B banks and consideration of financial and non-financial risks
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