82 FR 31151 - Agency Information Collection Activities: Information Collection Renewal; Comment Request; OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency

Federal Register Volume 82, Issue 127 (July 5, 2017)

The OCC, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other federal agencies to take this opportunity to comment on a continuing information collection, as required by the Paperwork Reduction Act of 1995 (PRA). In accordance with the requirements of the PRA, the OCC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OCC is soliciting comment concerning its information collection titled, ``OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches.''

[Federal Register Volume 82, Number 127 (Wednesday, July 5, 2017)]
[Notices]
[Pages 31151-31153]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-14000]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency


Agency Information Collection Activities: Information Collection 
Renewal; Comment Request; OCC Guidelines Establishing Heightened 
Standards for Certain Large Insured National Banks, Insured Federal 
Savings Associations, and Insured Federal Branches

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.

ACTION: Notice and request for comment.

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SUMMARY: The OCC, as part of its continuing effort to reduce paperwork 
and respondent burden, invites the general public and other federal 
agencies to take this opportunity to comment on a continuing 
information collection, as required by the Paperwork Reduction Act of 
1995 (PRA).
    In accordance with the requirements of the PRA, the OCC may not 
conduct or sponsor, and the respondent is not required to respond to, 
an information collection unless it displays a currently valid Office 
of Management and Budget (OMB) control number.
    The OCC is soliciting comment concerning its information collection 
titled, ``OCC Guidelines Establishing Heightened Standards for Certain 
Large Insured National Banks, Insured Federal Savings Associations, and 
Insured Federal Branches.''

DATES: Comments must be submitted on or before September 5, 2017.

ADDRESSES: Because paper mail in the Washington, DC area and at the OCC 
is subject to delay, commenters are encouraged to submit comments by 
email, if possible. Comments may be sent to: Legislative and Regulatory 
Activities Division, Office of the Comptroller of the Currency, 
Attention: 1557-0321, 400 7th Street SW., Suite 3E-218, Washington, DC 
20219. In addition, comments may be sent by fax to (571) 465-4326 or by 
electronic mail to [email protected]. You may personally inspect 
and photocopy comments at the OCC, 400 7th Street SW., Washington, DC 
20219. For security reasons, the OCC requires that visitors make an 
appointment to inspect comments. You may do so by calling (202) 649-
6700 or, for persons who are deaf or hard of hearing, TTY, (202) 649-
5597. Upon arrival, visitors will be required to present valid 
government-issued photo identification and submit to security screening 
in order to inspect and photocopy comments.
    All comments received, including attachments and other supporting 
materials, are part of the public record and subject to public 
disclosure. Do not include any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.

FOR FURTHER INFORMATION CONTACT: Shaquita Merritt, OCC Clearance 
Officer, (202) 649-5490 or, for persons who are deaf or hard of 
hearing, TTY, (202) 649-5597, Legislative and Regulatory Activities 
Division, Office of the Comptroller of the Currency, 400 7th Street 
SW., Suite 3E-218, Washington, DC 20219.

SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), federal 
agencies must obtain approval from OMB for each collection of 
information that they conduct or sponsor. ``Collection of information'' 
is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) to include agency 
requests or requirements that members of the public submit reports, 
keep records, or provide information to a third party. Section 
3506(c)(2)(A) of title 44 requires federal agencies to provide a 60-day 
notice in the Federal Register concerning each proposed collection of 
information, including each proposed extension of an existing 
collection of information, before submitting the collection to OMB for 
approval. To comply with this requirement, the OCC is publishing notice 
of the proposed collection of information set forth in this document.
    Title: OCC Guidelines Establishing Heightened Standards for Certain 
Large Insured National Banks, Insured Federal Savings Associations, and 
Insured Federal Branches.
    OMB Control No.: 1557-0321.
    Description: The OCC's guidelines codified in 12 CFR part 30, 
appendix D establish minimum standards for the design and 
implementation of a risk governance framework for insured national 
banks, insured federal savings associations, and insured federal 
branches of a foreign bank (bank). The guidelines apply to a bank with 
average total consolidated assets:
    (i) Equal to or greater than $50 billion; (ii) less than $50 
billion if that bank's parent company controls at least one insured 
national bank or insured federal savings association that has average 
total consolidated assets of $50 billion or greater; or (iii) less than 
$50 billion, if the OCC determines such bank's operations are highly 
complex or otherwise present a heightened risk as to warrant the 
application of the guidelines (covered banks). The guidelines also 
establish minimum standards for a board of directors in overseeing the 
framework's design and implementation. These guidelines were finalized 
on September 11, 2014.\1\ The OCC is now seeking to renew the 
information collection associated with these guidelines.
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    \1\ 79 FR 51518.
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    The standards contained in the guidelines are enforceable under 
section 39 of the Federal Deposit Insurance Act (FDIA),\2\ which 
authorizes the OCC to prescribe operational and managerial standards 
for insured national banks, insured federal savings associations, and 
insured federal branches of a foreign bank.
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    \2\ 12 U.S.C. 1831p-1. Section 39 was enacted as part of the 
Federal Deposit Insurance Corporation Improvement Act of 1991, 
Public Law 102-242, section 132(a), 105 Stat. 2236, 2267-70 (Dec. 
19, 1991).
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    The guidelines formalize the OCC's heightened expectations program. 
The guidelines also further the goal of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act of 2010 to strengthen the financial 
system by focusing management and boards of directors on improving and 
strengthening risk management practices and governance, thereby 
minimizing the probability and impact of future financial crises.
    The standards for the design and implementation of the risk 
governance framework, which contain collections of information, are as 
follows:

Standards for Risk Governance Framework

    Covered banks should establish and adhere to a formal, written risk 
governance framework designed by independent risk management. The 
framework should include delegations of authority from the board of 
directors to management committees and executive officers as well as 
risk limits established for material activities. The framework should 
be approved by the board of directors or the board's risk committee, 
and it should be reviewed and updated, at least annually, by 
independent risk management.

Front Line Units

    Front line units should take responsibility and be held accountable 
by the chief executive officer (CEO) and the board of directors for 
appropriately assessing and effectively managing all of

[[Page 31152]]

the risks associated with their activities. In fulfilling this 
responsibility, each front line unit should, either alone or in 
conjunction with another organizational unit that has the purpose of 
assisting a front line unit: (i) Assess, on an ongoing basis, the 
material risks associated with its activities and use such risk 
assessments as the basis for fulfilling its responsibilities and for 
determining if actions need to be taken to strengthen risk management 
or reduce risk given changes in the unit's risk profile or other 
conditions; (ii) establish and adhere to a set of written policies that 
include front line unit risk limits. Such policies should ensure risks 
associated with the front line unit's activities are effectively 
identified, measured, monitored, and controlled, consistent with the 
covered bank's risk appetite statement, concentration risk limits, and 
all policies established within the risk governance framework; (iii) 
establish and adhere to procedures and processes, as necessary to 
maintain compliance with the policies described in (ii); (iv) adhere to 
all applicable policies, procedures, and processes established by 
independent risk management; (v) develop, attract, and retain talent 
and maintain staffing levels required to carry out the unit's role and 
responsibilities effectively; (vi) establish and adhere to talent 
management processes; and (vii) establish and adhere to compensation 
and performance management programs.

Independent Risk Management

    Independent risk management should oversee the covered bank's risk-
taking activities and assess risks and issues independent of the front 
line units by: (i) Designing a comprehensive written risk governance 
framework commensurate with the size, complexity, and risk profile of 
the covered bank; (ii) identifying and assessing, on an ongoing basis, 
the covered bank's material aggregate risks and using such risk 
assessments as the basis for fulfilling its responsibilities and for 
determining if actions need to be taken to strengthen risk management 
or reduce risk given changes in the covered bank's risk profile or 
other conditions; (iii) establishing and adhering to enterprise 
policies that include concentration risk limits; (iv) establishing and 
adhering to procedures and processes to ensure compliance with policies 
in (iii); (v) identifying and communicating to the CEO and board of 
directors or board's risk committee material risks and significant 
instances where independent risk management's assessment of risk 
differs from that of a front line unit, and significant instances where 
a front line unit is not adhering to the risk governance framework; 
(vi) identifying and communicating to the board of directors or the 
board's risk committee material risks and significant instances where 
independent risk management's assessment of risk differs from the CEO, 
and significant instances where the CEO is not adhering to, or holding 
front line units accountable for adhering to, the risk governance 
framework; and (vii) developing, attracting, and retaining talent and 
maintaining staffing levels required to carry out the unit's role and 
responsibilities effectively while establishing and adhering to talent 
management processes and compensation and performance management 
programs.

Internal Audit

    Internal audit should ensure that the covered bank's risk 
governance framework complies with the guidelines and is appropriate 
for the size, complexity, and risk profile of the covered bank. It 
should maintain a complete and current inventory of all of the covered 
bank's material processes, product lines, services, and functions, and 
assess the risks, including emerging risks, associated with each, which 
collectively provide a basis for the audit plan. It should establish 
and adhere to an audit plan, which is periodically reviewed and 
updated, that takes into account the covered bank's risk profile, 
emerging risks, issues, and establishes the frequency with which 
activities should be audited. The audit plan should require internal 
audit to evaluate the adequacy of and compliance with policies, 
procedures, and processes established by front line units and 
independent risk management under the risk governance framework. 
Significant changes to the audit plan should be communicated to the 
board's audit committee. Internal audit should report in writing, 
conclusions and material issues and recommendations from audit work 
carried out under the audit plan to the board's audit committee. 
Reports should identify the root cause of any material issues and 
include: (i) A determination of whether the root cause creates an issue 
that has an impact on one organizational unit or multiple 
organizational units within the covered bank; and (ii) a determination 
of the effectiveness of front line units and independent risk 
management in identifying and resolving issues in a timely manner. 
Internal audit should establish and adhere to processes for 
independently assessing the design and ongoing effectiveness of the 
risk governance framework on at least an annual basis. The independent 
assessment should include a conclusion on the covered bank's compliance 
with the standards set forth in the guidelines. Internal audit should 
identify and communicate to the board's audit committee significant 
instances where front line units or independent risk management are not 
adhering to the risk governance framework. Internal audit should 
establish a quality assurance program that ensures internal audit's 
policies, procedures, and processes comply with applicable regulatory 
and industry guidance, are appropriate for the size, complexity, and 
risk profile of the covered bank, are updated to reflect changes to 
internal and external risk factors, emerging risks, and improvements in 
industry internal audit practices, and are consistently followed. 
Internal audit should develop, attract, and retain talent and maintain 
staffing levels required to effectively carry out its role and 
responsibilities. Internal audit should establish and adhere to talent 
management processes and compensation and performance management 
programs that comply with the guidelines.

Strategic Plan

    The CEO, with input from front line units, independent risk 
management, and internal audit, should be responsible for the 
development of a written strategic plan that should cover, at a 
minimum, a three-year period. The board of directors should evaluate 
and approve the plan and monitor management's efforts to implement the 
strategic plan at least annually. The plan should include a 
comprehensive assessment of risks that impact the covered bank, an 
overall mission statement and strategic objectives, an explanation of 
how the covered bank will update the risk governance framework to 
account for changes to its risk profile projected under the strategic 
plan, and be reviewed, updated, and approved due to changes in the 
covered bank's risk profile or operating environment that were not 
contemplated when the plan was developed.

Risk Appetite Statement

    A covered bank should have a comprehensive written statement that 
articulates its risk appetite that serves as the basis for the risk 
governance framework. It should contain qualitative components that 
describe a safe and sound risk culture and how the covered bank will 
assess and accept risks and quantitative limits that include sound 
stress testing processes and address earnings, capital, and liquidity.

[[Page 31153]]

Risk Limit Breaches

    A covered bank should establish and adhere to processes that 
require front line units and independent risk management to: (i) 
Identify breaches of the risk appetite statement, concentration risk 
limits, and front line unit risk limits; (ii) distinguish breaches 
based on the severity of their impact; (iii) establish protocols for 
disseminating information regarding a breach; (iv) provide a written 
description of the breach resolution; and (v) establish accountability 
for reporting and resolving breaches.

Concentration Risk Management

    The risk governance framework should include policies and 
supporting processes appropriate for the covered bank's size, 
complexity, and risk profile for effectively identifying, measuring, 
monitoring, and controlling the covered bank's concentrations of risk.

Risk Data Aggregation and Reporting

    The risk governance framework should include a set of policies, 
supported by appropriate procedures and processes, designed to provide 
risk data aggregation and reporting capabilities appropriate for the 
covered bank's size, complexity, and risk profile and to support 
supervisory reporting requirements. Collectively, these policies, 
procedures, and processes should provide for: (i) The design, 
implementation, and maintenance of a data architecture and information 
technology infrastructure that support the covered bank's risk 
aggregation and reporting needs during normal times and during times of 
stress; (ii) the capturing and aggregating of risk data and reporting 
of material risks, concentrations, and emerging risks in a timely 
manner to the board of directors and the OCC; and (iii) the 
distribution of risk reports to all relevant parties at a frequency 
that meets their needs for decision-making purposes.

Talent and Compensation Management

    A covered bank should establish and adhere to processes for talent 
development, recruitment, and succession planning. The board of 
directors or appropriate committee should review and approve a written 
talent management program. A covered bank should also establish and 
adhere to compensation and performance management programs that comply 
with any applicable statute or regulation.

Board of Directors Training and Evaluation

    The board of directors of a covered bank should establish and 
adhere to a formal, ongoing training program for all directors. The 
board of directors should also conduct an annual self-assessment.
    Type of Review: Regular review.
    Affected Public: Businesses or other for-profit.
    Estimated Number of Respondents: 41.
    Estimated Burden per Respondent: 3,776 hours.
    Estimated Total Annual Burden: 154,816 hours.
    Comments: Comments submitted in response to this notice will be 
summarized and included in the request for OMB approval. All comments 
will become a matter of public record. Comments are invited on:
    (a) Whether the collection of information is necessary for the 
proper performance of the functions of the OCC, including whether the 
information has practical utility;
    (b) The accuracy of the OCC's estimate of the burden of the 
information collection;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the collection on respondents, 
including through the use of automated collection techniques or other 
forms of information technology; and
    (e) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

    Dated: June 23, 2017.
Karen Solomon,
Deputy Chief Counsel, Office of the Comptroller of the Currency.
[FR Doc. 2017-14000 Filed 7-3-17; 8:45 am]
 BILLING CODE 4810-33-P