OCC Finalizes Guidelines on Recovery Planning for Large, Regional Banks

The OCC today issued final guidelines on recovery planning for the financial institutions it regulates with assets of more than $50 billion. The guidelines will join the OCC’s safety and soundness regulations as an appendix and be enforceable by statute, the agency said.

Under the guidelines, each covered bank would be expected to develop and maintain a recovery plan appropriate for its own risk profile, size, activities and complexity. Each plan would be expected to include an overview of the bank; qualitative and quantitative stress triggers for when the recovery plan would be implemented; the range of recovery options for each trigger and how they would be implemented; assessments of how each option would affect the covered bank; escalation procedures; reports to management or board members as appropriate; and communications procedures.

As ABA requested in its comment letter, the OCC recognized that many banks covered by the proposal already engage in significant recovery planning exercises, and the agency said “we do not intend for the recovery planning described in these final guidelines to be needlessly burdensome or duplicative of these other planning processes.” But while ABA urged the agency to allow covered banks to meet the guidelines by leveraging recovery planning done at the holding company level, the OCC emphasized that it is “unlikely” that a plan not prepared specifically for the covered bank will satisfy the final guidelines, unless the covered bank comprises at least 95 percent of the holding company’s assets.

Also as requested by ABA, the guidelines will take effect on a phased schedule. Banks with assets of over $750 billion will need to comply within six months of Jan. 1, 2017; banks with $100-$750 billion in assets will have 12 months; and banks with $50-$100 billion in assets will have up to 18 months after Jan. 1 to comply. For more information, contact ABA’s Hu Benton.