OCC issues final guidelines on recovery planning for covered banks | Orrick, Herrington & Sutcliffe LLP

The guidelines mandated that covered banks develop and maintain recovery plans specific to their size, risk profile, activities, and complexity. These plans must include triggers for financial and non-financial stress, a range of credible recovery options, and impact assessments detailing how each option would affect the bank’s capital, liquidity, and overall risk profile. To validate the effectiveness of recovery plans, covered banks must conduct periodic testing. This testing should be appropriate for the bank’s individual characteristics and confirm that the plan can realistically restore the bank to financial strength and viability. The OCC believes such testing will help banks proactively identify and address any weaknesses or deficiencies in their recovery plans. Compliance begins on January 1, 2025, when the new rules go into effect.