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 OCC is also removing outdated capital rules for national banks and Federal savings associations, including provisions related to OREO, and is making conforming edits to the other rules that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 Issues Interim Update to Policy Priorities for 2021 and Beyond

    In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.

    September 24, 2021 WebPage Regulatory News
    News

    EC Adopts Solvency II and Resolution Rules Package for Insurers

    The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.

    September 22, 2021 WebPage Regulatory News
    News

    OCC Issues Booklets on Regulatory Reporting and Earnings

    The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.

    September 22, 2021 WebPage Regulatory News
    News

    ECB Sets Out Results of Economy-Wide Climate Stress Tests

    The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.

    September 22, 2021 WebPage Regulatory News
    News

    EBA Examines Implications of Increasing Use of Digital Platforms in EU

    The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.

    September 21, 2021 WebPage Regulatory News
    News

    HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact

    The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.

    September 21, 2021 WebPage Regulatory News
    News

    ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures

    The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.

    September 21, 2021 WebPage Regulatory News
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7494