The Office of the Comptroller of the Currency (OCC) has revised its policies and procedures manual on bank enforcement actions regarding actions against banks that fail to correct persistent weaknesses.
The section of the manual titled “Bank Enforcement Actions and Related Matters” now includes “Appendix C: Actions Against Banks with Persistent Weaknesses.” This appendix provides greater transparency and clarity about how the OCC determines if a bank has persistent weaknesses and the possible additional actions the agency may take to address them. The policy is focused on larger and more complex banks.
“This revised policy promotes strong management by making clear that a bank’s inability to correct persistent weaknesses will result in proportionate, fair, and appropriate consequences, including growth restrictions and divestitures when warranted,” Acting Comptroller of the Currency Michael Hsu said. “These guardrails are especially important today, as banks grow to better serve their communities, improve their competitiveness, and achieve economies of scale. Well-managed banks provide invaluable support to our economy, and this revised policy promotes this result.”
The manual now describes actions the OCC may take against banks that exhibit persistent weaknesses. This could include additional requirements and restrictions, such as requirements that a bank improve its capital or liquidity position. It may also include restrictions on the bank’s growth, business activities, or payments of dividends. Additionally, the OCC also may require a bank to simplify or reduce its operations, reduce its assets, divest subsidiaries or business lines, or exit from one or more markets, if warranted.