OCC Issues Booklet on Supervision of Problem Banks
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.
Related Links
Keywords: Americas, US, Banking, Comptroller Handbook, Problem Banks, CAMELS Rating, Resolution Framework, Prompt Corrective Action, 12 CFR 6, OCC
Previous Article
MAS Consults on Capital and Reporting Requirements for Market RiskRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.