OCC Final Guidelines Establishing Heightened Standards for Certain Large Insured Banking Institutions
The Office of the Comptroller of the Currency (“OCC” or “agency”) adopted guidelines, issued as a new Appendix D to 12 CFR part 30 of its safety and soundness regulations, establishing thirteen separate minimum standards for the design and implementation of a risk governance framework (“framework”) to manage and control risk-taking activities and six minimum standards for oversight of the framework’s design and implementation by boards of directors (“boards”). The final Heightened Standards guidelines are generally consistent with the OCC’s proposal1 released in January 2014, with some modifications made in response to comments received. The guidelines include revisions intended to provide additional clarity and flexibility, as well as avoid the imposition of managerial-type responsibilities on board members.
The guidelines are applicable to “covered banks,” which are defined to include insured national banks, insured federal savings associations, and insured federal branches of foreign banks (collectively, “banks”) with average total consolidated assets of at least $50 billion. While the guidelines will apply to all banks with average total consolidated assets of at least $50 billion, a bank with average total consolidated assets of less than $50 billion that has either (1) a parent company controlling at least one covered bank or (2) operations determined by the OCC to be highly complex or otherwise present a heightened risk is also classified as a covered bank under the guidelines. These final guidelines supersede the OCC’s previous heightened expectations program with respect to covered banks.
As a part of the OCC’s ongoing efforts to integrate its regulations with those of the Office of Thrift Supervision, the OCC also adopted final rules and guidelines that integrate 12 CFR parts 30 and 170 by making all of its safety and soundness standards regulations and guidelines under part 30 applicable to both national banks and federal savings associations and removing the comparable federal savings association regulations and guidelines under part 170.
The final rule is effective November 10, 2014. The OCC has established expected compliance dates for the final guidelines under a tiered, phased-in schedule based on a covered bank’s average total consolidated assets, outlined in more detail below.