The Bank Slate


OCC aims to require recovery planning standards from more banks

The Office of the Comptroller of the Currency wants to expand its guidelines for recovery planning standards to more banks.

The agency, in a notice of proposed rulemaking, said it wants to expand the application of enforceable guidelines to include banks with at least $100 billion of assets. The current cutoff is $250 billion.

Acting Comptroller Michael Hsu referenced last year’s high-profile bank failures in the notice. Silicon Valley Bank in California had $209 billion of assets when it collapsed, while Signature Bank in New York had $110 billion at the time of its seizure.

First Republic Bank in California had $229 billion; it failed in May 2023.

“In March 2023, several insured depository institutions (IDIs) with total consolidated assets of $100 billion or more experienced significant withdrawals of uninsured deposits in response to underlying weaknesses in their financial position and failed,” Hsu wrote in the 26-page notice.

“These institutions were not subject to recovery planning, which would likely have bolstered their resilience,” he added.

The notice said that any covered bank would be required to test its overall recovery plan and each element of the plan to make sure that it serves as an effective tool during periods of severe stress.

“To meet this standard, a covered bank may simulate severe financial and non-financial stress scenarios, such as the scenarios used to develop the plan, to confirm that the plan is likely to work as intended when the covered bank is experiencing severe stress,” the notice added.

Comments are due by July 24.

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