OCC Finalizes Its Heightened Standards for Large Financial Institutions

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today published final guidelines to strengthen the 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 provide that covered institutions 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.

"The 2008 financial crisis demonstrated that much stronger supervisory standards would be necessary to manage the risks associated with large, complex financial institutions," said Comptroller of the Currency Thomas J. Curry. "As a result, the OCC raised its standards for risk management, corporate governance, and control to help ensure these institutions effectively anticipate, evaluate, and mitigate the risks they face. The guidelines finalized today are an important step in making our federal system of banks and thrifts stronger and more resilient."

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 generally 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.

Related Link

• OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches; Integration of Regulations (Final Rule) (PDF)