OCC Finalizes Heightened Standards for Financial Institutions
On September 2, 2014, the OCC issued final guidance around strengthening governance and risk management practices of large financial institutions. The guidelines apply to insured national banks, insured federal savings associations, and insured federal branches of foreign banks with $50 billion or more in average total consolidated assets. The guidelines also apply to an OCC-regulated institution with less than $50 billion in average total consolidated assets if that institution’s parent company controls at least one other covered institution. The guidelines state that banks should establish and adhere to a written risk governance framework to manage and control its risk-taking activities. The guidelines also provide minimum standards for the institutions’ boards of directors to oversee the risk governance framework.
- Institutions with $750 billion or more in average total consolidated assets are expected to comply immediately upon the effective date as published in the Federal Register.
- Institutions between $100 billion and $750 billion in consolidated assets should comply within six months of the effective date.
- Institutions with assets from $50 billion to $100 billion should comply within 18 months of effective date.
- Institutions with less than $50 billion that are covered because their parent company controls at least one other covered bank should comply on the same date that the other covered bank should comply.
- Institutions that reach the $50 billion threshold after publication of the guidelines should comply within 18 months from the date of the call report determining that it exceeded the threshold.
The final guidelines are largely the same as those proposed in January 2014. However, the final guidelines were revised to provide clarity and avoid imposing managerial responsibilities on board members.
Link to final guidelines: http://www.occ.treas.gov/news-issuances/news-releases/2014/nr-occ-2014-117.html