Revised recovery planning standards for certain large insured national banks, federal savings associations, and federal branches, were published late Tuesday by the national bank regulator; the standards are effective Jan. 1 with staggered compliance dates, the agency said.
The Office of the Comptroller of the Currency (OCC), in a bulletin, said the planning standards were revised to expand the guidelines to apply to banks, savings association and federal branches with at least $100 billion in average consolidated assets. Other revisions include:
- Incorporation of a testing standard for recovery plans.
- Clarification of the role of nonfinancial risk (including operational and strategic risk) in recovery planning.
- Providing covered banks with timeframes in which to comply with the final guidelines, including development of a testing framework and conducting testing (in response to comments from bankers).
The final guidelines do not apply to OCC-supervised institutions with less than $100 billion in average total consolidated assets, the agency stated.
The planning standards grew out of the impact of the 2008 financial crisis, the OCC indicated. Then, the agency said, it observed that many banks were not prepared to respond effectively to the financial effects of severe stress.
“The lack of or inadequate planning threatened the viability of some financial institutions, and many were forced to take significant actions without the benefit of a well- developed plan for recovery,” the agency said in its Federal Register notice announcing the revised guidelines.
“For the OCC, this experience highlighted the importance of large, complex banks having strong risk governance frameworks, including plans for how to respond quickly and effectively to, and recover from, the financial effects of severe stress,” the agency said.