OCC Issues Annual Report for 2023

The Office of the Comptroller of the Currency (OCC) has published its Annual Report 2023 which primarily informs of the current condition of the federal banking system, the key priorities of the regulator for both the past reporting period and the upcoming one, and of the key actions taken by the regulator to accomplish its goals.
As far as the condition of the banking system is concerned, the OCC notes the increasing risks resulting from high inflation levels and rising interest rates. Although resilience has remained strong – even during the banking „crisis“ in spring this year, there’s increasing headwind from a slowing global economy and high debt servicing costs. Additionally, as banks are extending their engagements with third parties to perform or service part of their business operations, there’s an increased risk in relation to system disruptions and cyber security. Particularly latter is also an issue, when it comes to banks‘ increasing efforts to engage in FinTech and digital securities. As the banking „crisis“ in the spring showed, banks, particularly large ones, also need to focus on improving resilience and capital adequacy to ensure financial stability in the banking sector and the financial market as a whole.
As far as the OCC’s priorities are concerned, the OCC notes that it primarily focused and will continue to focus on the following key issues:
– the enhancement of financial resilience of banks under its supervision. Corresponding proposed rule amendments were published earlier this year, including a proposal to increase the long-term debt requirements of institutions.
– the enhancement of cyber security of supervised institutions. In this context, the OCC notes the FFIEC’s updated „Cybersecurity Resource Guide for Financial Institutions“.
– the reduction of inequality in the U.S. banking system (e.g. loan appraisal bias) and the improvement of access to banking services especially by minorities.
– the further adaptation to digitalization. The OCC particularly highlights the creation of its Office of Financial Technology in the spring of 2023 to help build the regulator’s capabilities and know-how in this area. Furthermore, the Office will and is already actively engaging with institutions as far as the issuance, holding, and custodizing of digital securities is concerned.
– the enhancement of risk management processes of banks as regards climate change risks. In this context, the OCC announces upcoming reviews of large institutions (total consolidated assets of $100 billion or more) to develop a baseline understanding of climate change-related risk management procedures and requirements.
To view general administration activities and enforcement actions of the regulator in the past year, please refer to the report itself.