In major disaster, guidance urges examiners to first gather assessments from institutions

Management at financial institutions in major disaster areas should conduct initial risk assessments and have a process for refining such assessments as more complete information becomes available and recovery efforts proceed, according to new examiner guidance issued Friday.

Additionally, the guidance advises examiners to consider the extent to which weaknesses in a financial institution’s financial condition are caused by external problems related to a major disaster and its aftermath.

The guidance, issued by the Office of the Comptroller of the Currency (OCC), in conjunction with other federal financial institution regulators (including the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration (NCUA) and state banking regulatory agencies) outlines supervisory practices for assessing the conditions at institutions directly affected by a catastrophe that results in a presidential declaration of a major disaster.

Those institutions include credit unions, national banks, federal savings associations, and federal branches and agencies of foreign banks. The guidance also applies, OCC said, to institutions that may be located outside the area declared a major disaster, but have loans to or investments in individuals or entities located in the area declared a major disaster.

The national bank regulator said it encourages “any bank the operations or condition of which was adversely affected by a major disaster to contact and discuss remediation plans with its examiners.”

OCC also said Friday’s guidance is more detailed than that issued in the past (such as OCC Bulletin 2012-28, “Responding to a Declaration of a Legal Holiday or a Natural Disaster: Supervisory Guidance on Natural Disasters and Other Emergency Conditions,” September 2012), and focuses on how examiners should consider rating banks that have been adversely affected by a natural disaster in declared major disaster areas.

OCC Releases Examiner Guidance for Institutions Affected by Major Disasters

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