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FEDERAL RESERVE BANK OF N E W YORK r Circular No. 8719 January 3, 1980 UNIFORM INTERAGENCY POLICY STATEMENTS Coordinated Action Regarding Examination and Supervisory Procedures To All State Member Banks and Bank Holding Companies, and Others Concerned, in the Second Federal Reserve District: The Board of Governors of the Federal Reserve System has announced the adoption of policy statements advising of coordinated action among Federal bank supervisors with respect to examination, supervision, and corrective actions affecting bank holding companies and commercial banks. The following is quoted from the Board’s announcement: The policy statements were recommended to the Board and to the other Federal bank supervisors by the Federal Financial Institutions Examination Council. One policy statement, concerning inspection o f bank holding companies and examination o f subsidiary banks, would require coordinated inspections and examinations o f at least the bank holding company and its lead bank in the case of: 1. Any bank holding company with consolidated assets o f more than $10 billion; 2. Any bank holding company or lead bank o f a bank holding company in the two least favorable rating categories o f the five-category uniform rating systems for bank and bank holding companies used by the agencies;1 and 3. Any bank holding company or lead bank o f a bank holding company in the third, or middle, category o f these rating systems, if the institution’s financial condition appears to have worsened significantly since it was inspected or examined. This policy statement calls for examination o f other banks o f a multi-bank holding company to be coor dinated with inspection o f the parent company to the extent possible. State banking authorities are to be kept in formed and encouraged to participate where State-chartered institutions are concerned. The second policy statement approved by the Board deals with corrective actions by the agencies. It calls for the following procedures: 1. A Federal bank regulatory agency initiating a formal enforcement action against a bank holding com pany or a commercial bank will notify the other two agencies. 2. Review by a committee composed o f the directors o f bank supervision o f the three agencies o f any dif ferences o f view among the agencies on actions to be taken. Unresolved differences will be referred to the Examination Council Members o f the bank supervisory agencies. 3. Arrangements for notification, by the Federal Reserve and Federal Deposit Insurance Corporation, to the appropriate State supervisory authority o f intent to institute a formal corrective action against a bank holding company or State-chartered bank. ‘ Texts o f these rating systems are available upon request. Enclosed—for member banks and bank holding companies in this District—is a copy of each of the statements; additional copies will be furnished upon request. Questions regarding this matter may be directed to our Bank Examinations Department (Tel. No. 212-791-5240). T homas M. T im len , First Vice President. INTERAGENCY COORDINATION OF FORMAL CORRECTIVE, ACTION BY THE FEDERAL BANK REGULATORY AGENCIES-7 Any federal banking regulatory agency that initiates formal enforcem ent action against a bank holding company or a com m ercial bank shall notify the other two federal banking regulatory agencies that such action is being taken. All such notifications shall be in writing and shall take place at both the regional and head o ffices of the banking agencies. In the event "com plementary" action (e.g., action involving a bank(s) and the parent holding company) is considered appropriate by two or more federal agencies, the preparation, processing, and follow-up of the corrective action shall be coordinated by the agencies directly involved. In the event differences of opinion arise between the federal agencies' sta ffs concerning such m atters as the appropriateness of a specific action, the need for complementary action, or the severity or content of such actions, the circum stances shall be reviewed on a timely basis by a com m ittee consisting of the directors of bank supervision, and legal counsel as appropriate, for each of the federal agencies. If the com m ittee is unable to resolve the differences, the m atter will be referred to the Council Members of the agencies involved. With respect to Federal-State agency coordination, the Federal R eserve provides the appropriate State supervisory authority with notice of its intent to institute a formal corrective action against a bank holding company. U.S.C. lS18(m), the federal regulatory agencies are required Pursuant to 12 to provide the appropriate State supervisory authority with notice of their intent to institute a formal corrective action against a State chartered bank. This requirement is made applicable to bank holding companies by 12 U .S.C. 1818(b)(3). These procedures are not intended to preclude or forestall any federal agency from initiating a formal corrective action alone and on a timely basis against an institution for which it has primary supervisory jurisdiction. This policy pertains to formal adm inistrative actions taken by the Federal banking agencies pursuant to the Financial Institutions Supervisory Act of 1966 as amended. [Enc. Cir. No. 8719] IN T E R A G E N C Y C O O R D IN A T IO N O F B A N K H O LD IN G C O M P A N Y IN S P E C T IO N S A N D S U B S ID IA R Y B A N K E X A M IN A T IO N S B an k su p e r v iso ry o ffic ia ls at each of th e fe d e ra l a g e n c ie s ' R e g io n s or D is t r ic t s s h a ll hold p e r io d ic p lan n in g s e ss io n s in o rd er to p r io r it iz e and sc h e d u le th e c o o r d in a tio n o f b an k h o ld in g c o m p a n y in s p e c tio n s and su b sid ia r y bank e x a m in a tio n s. T h e se p lan n in g s e s s io n s s h a ll b e h eld a t l e a s t se m ia n n u a lly n e c e ssa ry in o rd e r to p ro v id e fo r a c o o r d in a te d or m o re fr e q u e n tly a s sc h e d u le th a t w ill m a x im iz e the e f f i c i e n t u se o f e x a m in a tio n r e s o u r c e s and en h an ce th e in te g r a tio n o f bank and h o ld in g c o m p a n y e x a m in a tio n s. C o o rd in a tio n o f in s p e c tio n s and e x a m in a tio n s should fo c u s on th e u se o f co m m o n fin a n c ia l s t a t e m e n t d a t e s w h ere p o s s ib le and a llo w fo r jo in t d isc u ssio n s o f e x a m in a tio n fin d in g s w ith m a n a g e m e n t. It n eed not a lw a y s c o n c u r r e n c y , c o m m o n " a s o f " d a te s or sim u lta n e o u s s t a r t in g d a t e s . d ate s m ay b e c a lle d in fo r c a s e s w h ere th e b an k e x a m in a tio n in v o lv e a b so lu te S t a g g e r e d s t a r t in g is lik e ly to ta k e s ig n ific a n t ly lo n g er th an th e bank h oldin g c o m p a n y in s p e c tio n s , and fo r o th e r r e a so n s. The a g e n c ie s sh a ll be re q u ire d to con du ct c o o r d in a te d bank h oldin g c o m p a n y in s p e c t io n s /le a d b an k e x a m in a tio n s f o r : (1) any b an k h oldin g c o m p a n y w ith c o n s o lid a te d a s s e t s in e x c e s s o f $10 b illio n ; (2) an y b an k h old in g c o m p a n y or b an k h old in g c o m p a n y su b sid ia r y le a d bank r a te d c o m p o s it e 4 or 5 under th e B ank H oldin g C o m p an y R a t in g S y ste m or th e U n ifo rm In te ra g e n c y R a tin g S y ste m fo r b a n k s; and (3) an y b an k h old in g c o m p a n y or b an k h oldin g co m p an y su b sid ia r y le ad bank r a t e d c o m p o s it e 3 w hose fin a n c ia l c o n d itio n ap p ears to h av e w o rse n e d s ig n ific a n t ly sin c e th e la s t in sp e c tio n /e x a m in a tio n . [Enc. Cir. No. 8719] (Over) T he a g e n c ie s w ill a t t e m p t , to th e e x t e n t p o ssib le and w h ere r e s o u r c e s p e r m it, to c o o r d in a te e x a m in a tio n s and in sp e c tio n s fo r a ll o th e r ban k h o ld in g c o m p a n ie s w ith p r io r ity given to th o se h o ld in g c o m p a n ie s a n d /o r su b sid ia r y b an k s w here c ir c u m s t a n c e s in d ic a te th a t su ch c o o r d in a tio n is p a r t ic u la r ly d e s ir a b le . B an k e x a m in a tio n s fo r a d d itio n a l s u b sid ia r y b an k s w ith in a m u ltib an k holding c o m p a n y c o v e r e d a b o v e sh o u ld b e c o o r d in a te d w ith th e p a r e n t in sp e c tio n to th e e x t e n t p r a c t ic a b l e and w h ere r e s o u r c e s w ill p e r m it. In th o se m u ltib an k c o m p a n ie s w ith o u t a d e s ig n a te d le a d b a n k , th e la r g e s t ban k b a se d on t o t a l a s s e t s sh a ll b e c o n sid e r e d th e le a d b an k fo r p u r p o se s o f th is p o lic y s t a t e m e n t . In o rd e r to k e e p th e S t a t e b an k r e g u la t o r s a w a r e o f c o o r d in a te d e f f o r t s by th e f e d e r a l b a n k in g a g e n c ie s and to e n c o u ra g e p a r t ic ip a t io n by th e S t a t e r e g u la t o r s , th e F e d e r a l R e s e r v e or F D IC , r e s p e c t iv e ly , sh ould in fo rm th e a p p r o p r ia te S t a t e ban k r e g u la to r o f c o o r d in a te d f e d e r a l e f f o r t s a f f e c t i n g e ith e r a bank holdin g c o m p a n y or S t a t e b an k under th e ju risd ic tio n o f th e S t a t e b an k r e g u la t o r . A lth o u gh th is state m e n t o f p o lic y is in te n d e d to e f f o r t s a t c o o r d in a tin g su p e rv isio n o f b an k h oldin g c o m p a n ie s , en h an ce in te r a g e n c y in clu d in g th e ir bank and nonbank s u b s id ia r ie s , it is not in te n d e d to p r e c lu d e or p ro h ib it an y f e d e r a l a g e n c y fr o m u sin g its a u th o r ity to e x a m in e o r g a n iz a t io n s ’’a f f i l i a t e d " in s titu tio n s fo r w hich it h as p r im a ry f e d e r a l su p e r v iso ry r e sp o n sib ility . w ith fin a n c ia l
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