UPDATED: OCC sets $250 billion asset-size threshold for banks subject to required recovery planning

The nation’s top banking regulator has finalized, effective Jan. 28, its September-proposed increase from $50 billion to $250 billion in the threshold asset size of banking institutions subject to the agency’s enforceable recovery planning guidelines, according to a Federal Register notice published Thursday.

The aim of the recovery guidelines is to help banks plan for quick, effective recoveries from the financial effects of severe stress.  The asset-size threshold change effectively reduces from 25 to eight the total number of banks subject to the guidelines, according to the Office of the Comptroller of the Currency (OCC) and based on the latest data available to the agency.

Since the change will be in effect soon, OCC says it “would not expect banks with less than $250 billion in average total consolidated assets to complete the annual process for review by management and review and approval by the board of their 2018 recovery plans or to begin preparing a 2019 recovery plan,” according to the notice. (This was in response to one commenter’s urging that the agency to immediately clarify that banks below the new threshold will not be expected to provide recovery plans under the final guidelines on or after Jan. 1, 2019.)

Under the guidelines, “average total consolidated assets” means “average total consolidated assets of the bank or covered bank as reported on the bank’s or covered bank’s consolidated reports of condition and income for the four most recent consecutive quarters,” the notice says. The final guidelines also, and as proposed, reduce from 18 months to 12 months the amount of time a bank would have to comply with the guidelines once it becomes subject to them.

The guidelines set minimum standards for recovery planning by insured national banks, insured federal savings associations, and insured federal branches of foreign banks. Based on its experience reviewing recovery plans, OCC says raising the asset threshold to $250 billion captures the larger, more complex, or potentially more interconnected banks that “present the types of risks that could benefit most from having the types of governance and planning processes that identify and assist in responding to significant stress events,” the agency says. It also corresponds with the increase to $250 billion in the asset threshold for banks subject to living will (resolution plan) requirements under this year’s Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155), OCC says in its notice.

OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches ; Technical Amendments

RR: Higher asset threshold means 8 banks would be covered under OCC-proposed recovery planning guidelines(Sept. 18, 2018)

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