The Office of the Comptroller of the Currency (OCC) published notices seeking comments on the renewal of two information collections titled “Funding and Liquidity Risk Management” and “Leveraged Lending.” The comment period on both the notices ends on April 25, 2022. In addition, the Board of Governors of the Federal Reserve System (FED) approved certain merger and acquisition applications for certain banks.
The information collection on funding and liquidity risk management concerns a Policy statement that summarizes the principles of sound liquidity risk management that the Federal banking agencies have issued in the past and, where appropriate, harmonizes these principles with the international statement issued by the Basel Committee on Banking Supervision titled “Principles for Sound Liquidity Risk Management and Supervision.” Section 20 of the Policy Statement states that liquidity risk reports should provide aggregate information with sufficient supporting detail to enable management to assess the sensitivity of the institution to changes in market conditions, its own financial performance, and other important risk factors. Institutions also should report on the use and availability of government support, such as lending and guarantee programs, and implications on liquidity positions, particularly since these programs are generally temporary or reserved as a source for contingent funding. The Policy Statement describes supervisory expectations for all depository institutions, including banks, savings associations, and credit unions, with estimated respondents for the information collection being 1,069.
The information collection on leveraged lending concerns the guidance from certain supervisory agencies to the financial institutions they supervise on how to evaluate and monitor credit risks in leveraged loans, understand the effect of changes in borrowers' enterprise values on credit portfolio quality, and assess the sensitivity of future credit losses to these changes in enterprise values. The final guidance recommends that financial institutions consider developing underwriting policies for leveraged lending, including stress-testing procedures for leveraged credits; risk management policies, including stress-testing procedures for pipeline exposures; and policies and procedures for incorporating the results of leveraged credit and pipeline stress tests into the firm's overall stress-testing framework. While not requirements, these recommended policies qualify as “collections of information” as defined in the Paperwork Reduction Act of 1995. Respondents to this information collection are financial institutions with leveraged lending activities as defined in the guidance that may develop policies recommended in the guidance, with the estimated number of respondents expected to be 29.
Additionally, the FED approved the applications from:
- Centennial Bank, Conway, Arkansas, to merge with Happy State Bank and to establish and operate branches at the locations of the main office and branches of Happy State Bank.
- Home BancShares, Inc., Conway, Arkansas, to acquire Happy Bancshares, Inc., Canyon, Texas, and thereby indirectly acquire Happy State Bank, Happy, Texas.
- South State Corporation, Winter Haven, Florida, to acquire Atlantic Capital Bancshares, Inc., and thereby indirectly acquire its subsidiary bank, Atlantic Capital Bank, National Association, both of Atlanta, Georgia.
- Stock Yards Bancorp, Inc., Louisville, Kentucky, to acquire Commonwealth Bancshares, Inc., and indirectly acquire its subsidiary bank, Commonwealth Bank & Trust Company, both of Louisville, Kentucky.
- TriCo Bancshares, Chico, California, to acquire Valley Republic Bancorp, and thereby indirectly acquire its subsidiary bank, Valley Republic Bank, both of Bakersfield, California.
- A.N.B. Holding Company, Ltd., to increase its ownership interest of The ANB Corporation, both of Terrell, Texas. The ANB Corporation controls The American National Bank of Texas, Terrell, Texas.
- Notice on Funding and Liquidity Risk Management
- Notice on Leveraged Lending
- Press Release on South State Corporation
- Press Release on Home BancShares, Inc.
- Press Release on A.N.B. Holding Company, Ltd.
- Press Release on TriCo Bancshares
- Press Release on Stock Yards Bancorp, Inc.
Keywords: Americas, US, Banking, Lending, Credit Risk, Leveraged Lending, Liquidity Risk, Basel, Information Collection, Reporting, Consolidation of Banks, OCC, FED
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Previous ArticleHMT Issues Instrument on IFPR Changes; BoE Issues Reporting Updates
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.
The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.
The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).
The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The Network for Greening the Financial System (NGFS) published its latest set of long-term climate macro-financial scenarios (Phase IV) for assessing forward-looking climate risks.