Featured Product

    OCC Amends Rule on Other Real Estate Owned Activities for Banks

    October 22, 2019

    OCC finalized a rule to clarify and streamline the regulation on other real estate owned (OREO) for national banks and to update the regulatory framework for OREO activities at Federal savings associations. OCC is also removing outdated capital rules for national banks and Federal savings associations, including provisions related to OREO, and is making conforming edits to the other rules that reference those capital rules. This final rule will apply to OREO activities at all national banks and federal savings associations and will be effective from December 01, 2019.

    OREO refers to real estate acquired in satisfaction of debts previously contracted and real estate no longer used or planned to be used to conduct banking activities. Post consultation, OCC is making minor adjustments to the proposed technical amendments related to the capital rules. Specifically, OCC is removing Appendices A and B to risk-based capital guidelines for national banks (12 CFR, Part 3) and capital requirements for Federal savings associations (12 CFR, Part 167) and making conforming technical edits to other CFR parts that reference those provisions.

    Additionally, the holding period for national banks under the final rule remains unchanged and consists of an initial five-year holding period, with up to an additional five years if approved by OCC. The final rule also establishes an initial holding period for Federal savings associations of five years after commencement of the holding period to ensure the safe and sound management of OREO holdings. If the Federal savings association has not disposed of the OREO within the initial five-year holding period, the savings association may request OCC approval to continue to hold the real property as OREO for up to five additional years. These provisions are consistent with the rules that apply to national banks. The final rule also adopts for Federal savings associations the existing national bank provision describing the date the holding period for OREO begins.

    Finally, the final rule updates and streamlines the notification provision by requiring prior notification only when the proposed additional expenditures and recorded investment in an individual OREO property exceeds 10% of the institution's total equity capital based on its most recent Call Report. National banks with significant loan-loss reserves or excessive losses recorded in accumulated other comprehensive income will generally have a reduced limit for notification. National banks holding assets that are deducted under the regulatory capital rule will generally have an increase in limit for notification under the final rule. OCC expects a similar result for Federal savings associations that previously used a notification framework based on lending limits.

     

    Related Link: Federal Register Notice

    Effective Date: December 01, 2019

    Keywords: Americas, US, Banking, OREO, Real Estate, Credit Risk, Regulatory Capital, Federal Savings Association, OCC

    Featured Experts
    Related Articles
    News

    APRA Publishes Approach to Regulating and Supervising GCRA Risks

    APRA published an information paper that sets out a more intensive regulatory approach to transform governance, culture, remuneration, and accountability (GCRA) practices across the prudentially regulated financial sector.

    November 19, 2019 WebPage Regulatory News
    News

    IAIS Publishes Application Paper on Recovery Planning

    IAIS published the final application paper on recovery planning, along with the resolution of comments on the draft application paper.

    November 18, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of November Meeting of RCG for MENA Region

    FSB published a summary of the November meeting of the Regional Consultative Group (RCG) for Middle East and North Africa (MENA).

    November 17, 2019 WebPage Regulatory News
    News

    EBA Single Rulebook Q&A: Second Update for November 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to eight questions that relate to the Bank Resolution and Recovery Directive (BRRD) and the Capital Requirements Regulation and Directive (CRR and CRD).

    November 15, 2019 WebPage Regulatory News
    News

    FASB Delays Effective Dates for CECL, Leases, and Hedging Standards

    FASB issued two Accounting Standards Updates finalizing the delays in effective dates for standards on current expected credit losses (CECL), leases, hedging, and long-duration insurance contracts.

    November 15, 2019 WebPage Regulatory News
    News

    ESMA Updates Q&A on Securitization Regulation in November 2019

    ESMA updated questions and answers (Q&A) on the Securitization Regulation (Regulation 2017/2402).

    November 15, 2019 WebPage Regulatory News
    News

    HKMA Announces Finalization of Banking Liquidity Amendment Rules 2019

    HKMA issued a letter informing all authorized institutions that negative vetting of the Banking (Liquidity) (Amendment) Rules 2019 (BLAR) has now expired. Thus, the BLAR will now come into operation from January 01, 2020.

    November 15, 2019 WebPage Regulatory News
    News

    BCBS Consults on Revised Disclosures for Market Risk Framework

    BCBS launched a consultation on the revised disclosure requirements for the market risk framework for banks.

    November 14, 2019 WebPage Regulatory News
    News

    BCBS Consults on Disclosure Templates of Sovereign Exposures of Banks

    BCBS published a consultation on the voluntary disclosure templates related to sovereign exposures of banks.

    November 14, 2019 WebPage Regulatory News
    News

    PRA Publishes Final Policy on Maintenance of TMTP Under Solvency II

    PRA published the policy statement (PS25/19) that contains the final supervisory statement (SS6/16) on maintenance of the transitional measure on technical provisions (TMTPs) under Solvency II.

    November 14, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4163