OCC Requests Comments on Proposed Recovery Plan Guidelines for Banks

The Office of the Comptroller of the Currency ("OCC") solicited comments on a proposed rule to establish guidelines for recovery planning by banks. The guidelines would apply to insured national banks, insured federal savings associations and insured federal branches of foreign banks with average total consolidated assets of $50 billion or more ("covered banks"). The OCC emphasized that due to "recent large-scale operational events, such as destructive cyber attacks," institutions must plan how to address significant stress events before they occur.

Highlights of the proposal include the following:

• Recovery Plan. The recovery plan must be appropriate for the covered bank's individual risk profile, size, activities and complexity, including the complexity of its organizational and legal entity structure. The recovery plan would (i) identify triggers that reflect the particular vulnerabilities of a covered bank, (ii) identify and include an assessment of credible options for the covered bank to undertake in order to restore financial and operational strength, and (iii) address escalation procedures, management reports and communication procedures.
• Management and Board of Directors. Management of the covered bank should review the recovery plan annually at the very least and revise the plan as necessary to reflect material changes in the covered bank's risk profile, complexity, size and activities, as well as changes in external threats. The covered bank's board of directors (or an appropriate committee of the board) should review and approve the recovery plan annually at least and more often as needed to address any changes made by management.
• Enforceability of the Guidelines. Pursuant to Federal Deposit Insurance Act ("FDIA"), Section 39 ("Standards for Safety and Soundness"), if a covered bank fails to meet a standard prescribed by the guidelines, then the OCC may require the covered bank to submit a plan specifying the steps it will take to comply with the standard. The OCC also may issue an order enforceable by FDIA Section 8 ("Termination of Status as Insured Depository Institution") if a covered bank that has been notified that it is in violation of a standard fails to submit an acceptable compliance plan, or fails to comply materially with an OCC-approved plan.

Comments on the proposal must be submitted by February 16, 2016.