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    OCC Issues Booklet on Supervision of Problem Banks

    September 13, 2021

    The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant. The "Problem Bank Supervision" booklet replaces "An Examiner's Guide to Problem Bank Identification, Rehabilitation, and Resolution," which is dated January 2001 and incorporates the OCC Bulletin 2018-33 titled "Prompt Corrective Action: Guidelines and Rescissions."

    The Problem Bank Supervision booklet describes the approach of OCC to timely identification and rehabilitation of problem banks and discusses the authority of OCC under the "Prompt Corrective Action" rule (12 CFR 6). When an insured problem bank’s condition deteriorates to the point that it is no longer viable, OCC coordinates with the Federal Deposit Insurance Corporation (FDIC) to resolve the bank in an orderly manner and at the least cost to the Deposit Insurance Fund. OCC defines a problem bank as a bank with a CAMELS (Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity) or a ROCA (Risk management, Operational controls, Compliance, and Asset quality) composite rating of 3, 4, or 5. Most problem banks are also in troubled condition as defined in 12 CFR 5.51(c)(7). A bank is in troubled condition if it:

    • has a CAMELS composite rating of 4 or 5.
    • is subject to a cease-and-desist order, consent order, or formal written agreement that requires action to improve the bank’s financial condition, unless otherwise informed in writing by OCC.
    • is informed by OCC in writing that OCC has designated the bank in troubled condition.

    This booklet is prepared for use by OCC examiners in connection with their examination and supervision of national banks and federal savings associations. Examiners use this booklet in conjunction with the “Bank Supervision Process,” "Community Bank Supervision," "Federal Branches and Agencies Supervision," "Large Bank Supervision," and other booklets of the Comptroller's Handbook, as applicable. 


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    Keywords: Americas, US, Banking, Comptroller Handbook, Problem Banks, CAMELS Rating, Resolution Framework, Prompt Corrective Action, 12 CFR 6, OCC

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