The Office of the Comptroller of the Currency has issued its final rule to expand its enforceable recovery planning guidelines to national banks, federal savings associations and federal branches with at least $100 billion in assets, down from the current limit of $250 billion. The rule will be officially published in the Federal Register tomorrow.
In addition to the lower asset threshold, the final rule establishes a new provision requiring covered banks to test their overall recovery plans to ensure that those plans will be effective during periods of severe stress. It also requires recovery plans to consider both financial risk and nonfinancial risk, and to identify nonfinancial stress and triggers.
The OCC first proposed the rule in June, citing last year’s failure of Silicon Valley Bank and two other regional banks as a reason for the lower asset threshold. “The events, coupled with the OCC’s supervisory experience, made clear the importance of ensuring that banks in [the $100 billion-$250 billion] size range are adequately prepared and have developed a plan to respond to the financial effects of severe stress, particularly in light of the contagion effects and systemic risks they may pose,” the agency said at the time.
One change from the proposed rule is a longer compliance period, commencing Jan. 1, 2025. Banks that are currently covered then have 12 months after Jan. 1 to amend their recovery plans to address nonfinancial risk and an additional six months to comply with the new testing provision, according to the final rule. Banks that are not covered under the current guidelines but will become covered on the January 1, 2025, effective date have 12 months to develop their recovery plans and an additional 12 months to comply with the testing provision.
