Featured Product

    OCC Outlines Supervisory Strategy for 2021

    October 01, 2020

    The OCC Committee on Bank Supervision released the bank supervision operating plan for the fiscal year 2021. The plan outlines supervisory priorities and aligns with the Strategic Plan of OCC for fiscal years 2019–2023 and the priorities of the National Risk Committee. The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC will provide periodic updates about supervisory priorities through the Semiannual Risk Perspective in the Fall and Spring.

    OCC states that it may adjust supervisory strategies, as appropriate, during the fiscal year in response to the emerging risks and supervisory priorities. For fiscal year 2021, the supervisory efforts will be flexible to recognize the broad, bank-specific impact of pandemic and resulting the economic, financial, operational, and compliance implications. In addition to the baseline supervision to assign ratings, the development of supervisory strategies will focus on the following risk areas:

    • Credit risk management, given projected weaker economic conditions. Examiner focus would be on commercial and retail credit risk control functions, including portfolio administration and risk management, timely risk identification, independent loan review, risk rating accuracy, policy exception tracking, collateral valuation, stress testing, and collections/workout management.
    • Commercial and residential real estate concentration risk management, including verification that risk assessment and management practices adequately account for concentration risks. Examiner focus should include portfolios with material concentrations, especially in sectors hard hit by the pandemic.
    • Appropriateness of allowance for loan and lease losses/allowance for credit losses, forecasting the cumulative impact from a lengthy period of eased underwriting standards, and potential higher probability of default and loss given default. Examiners should focus on Current Expected Credit Losses (CECL) implementation for  institutions that have adopted the standard and CECL preparation for those that will be implementing the standard.
    • Cybersecurity and operational resilience with a focus on threat vulnerability and detection, access controls and data security, and managing third-party access. Examiners should also focus on incident response and remediation processes.
    • Compliance risk management associated with 2020 pandemic-related bank activities, such as CARES Act loan forbearance requirements or other bank-provided consumer loan or account accommodations.
    • Bank preparation for the phase-out of the London Interbank Offering Rate as a reference rate after 2021, including operational and consumer impact assessments and change management related to implementation and disclosure of an alternative index for pricing loans, deposits, and other products and services.
    • Proper oversight of significant third-party relationships, including partnerships. Examiners should identify where those relationships represent significant concentrations in operations, bank resiliency, or other risks. and should assess risk oversight of third party’s own management of cybersecurity and resilience risks.
    • Change management over significant operational changes. Examiners should evaluate governance over new technology innovation and implementation, including use of cloud computing, artificial intelligence, digitalization in risk management processes, new products and services, and notable changes in strategic plans. 

     

    Related Links

    Keywords: Americas, US, Banking, COVID-19, CECL, LIBOR, Cyber Risk, Credit Risk, Fintech, Operation Plan, Strategic Plan, CARES Act, Outsourcing Arrangements, OCC

    Featured Experts
    Related Articles
    News

    APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness

    APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).

    December 02, 2021 WebPage Regulatory News
    News

    EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance

    The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).

    December 01, 2021 WebPage Regulatory News
    News

    FSB Sets Out Good Practices for Crisis Management Groups

    The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.

    November 30, 2021 WebPage Regulatory News
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Updates Timeline for Implementation of Certain Basel Rules

    Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.

    November 29, 2021 WebPage Regulatory News
    News

    EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR

    EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.

    November 29, 2021 WebPage Regulatory News
    News

    FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR

    The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Capital Adequacy Standards for Banks

    The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.

    November 29, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.

    November 29, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7751