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FEDERAL RESERVE BANK 

OF NEW 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 policystatements advising of coordinated action among Federal bank supervisors with respect to examination,supervision, and corrective actions affecting bank holding companies and commercial banks. The followingis quoted from the Board’s announcement:

The policy statements were recommended to the Board and to the other Federal bank supervisors by theFederal Financial Institutions Examination Council.

One policy statement, concerning inspection of bank holding companies and examination of subsidiary

banks, would require coordinated inspections and examinations of at least the bank holding company and itslead bank in the case of:

1. Any bank holding company with consolidated assets o f more than $10 billion;

2. Any bank holding com pany or lead bank of a bank holding company in the two least favorable rating

categories of the fivecategory uniform rating systems for bank and bank holding companies used by theagencies;1and

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 sinceit was inspected or examined.

This policy statement calls for examination of other banks of a multibank holding company to be coor-dinated with inspection o f the parent com pany to the extent possible. State banking authorities are to be kept in-

formed and encouraged to participate where Statechartered institutions are concerned.

The second policy statement approved by the Board deals with corrective actions by the agencies. It calls forthe 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 of bank supervision o f the three agencies of any dif-

ferences o f view among the agencies on actions to be taken. Unresolved differences will be referred to the

Examination Council Members of the bank supervisory agencies.

3. Arrangem ents for notification , by the Federal Reserve and Federal Deposit Insurance Corporation , to

the appropriate State supervisory authority of intent to institute a formal corrective action against abank holding company or Statechartered bank.

‘Texts of these rating systems are available upon request.

Enclosed—for member banks and bank holding companies in this District—is a copy of each of thestatements; additional copies will be furnished upon request. Questions regarding this matter may bedirected to our Bank Examinations Department (Tel. No. 2127915240).

Th o m a s   M. T im l e n ,

First Vice President.

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INTERAGENCY COORDINATION OF FORMAL CORRECTIVE,ACTION BY THE FEDERAL BANK REGULATORY AGENCIES-7

Any federal banking regulatory agency that initiates formal enforcementaction against a bank holding company or a commercial bank shall notify the other two

fede ral banking regulatory agen cies that such action is being taken. All such

notifications shall be in writing and shall take place at both the regional and head

of fice s of the banking agen cies. In the event "complementary" 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 differen ces

of opinion arise between the federal agencies' staffs concerning such matters as the

appropriateness of a specific action, the need for complementary action, or the

severity or content of such actions, the circumstances shall be reviewed on a timely

basis by a committee consisting of the directors of bank supervision, and legal counsel

as appropriate, for each of the federa l agencies . If the committee is unable to resolve

the differences, the matter will be referred to the Council Members of the agencies

involved.

With respect to Federal-State agency coordination, the Federal Reserve

provides the appropriate State supervisory authority with notice of its intent to

institute a formal correctiv e action against a bank holding company. Pursuant to 12

U.S.C. lS18(m), the federal regulatory agencies are required to provide the

appropriate State supervisory authority with notice of their intent to institute a

formal corre ctive 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 administrative actions taken by the Federalbanking agencies pursuant to the Financial Institutions Supervisory Act of 1966as amended.

[Enc. Cir. No. 8719]

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I N T E R A G E N C Y C O O R D I N A T IO N O F B A N K H O L D IN G C O M P A N Y

I N SP E C T I O N S A N D SU B SI D I A RY B A N K E XA MI N A T I O N S

B a nk s upe rv i so ry o f f i c i a l s a t e a c h o f t h e f e d e ra l a g e n c ie s ' Re g io ns or

D istric ts shall hold perio dic planning sess ion s in order to pr ior it ize and schedu le the

coord ina t ion of bank hold ing company inspect ions and subs id ia ry bank examinat ions .

These p lanning se s s ions sha l l be he ld a t lea s t s emiannua l ly or more f requent ly a s

neces sary in order to provide for a coord ina ted schedule tha t wi l l maximize the

e f f ic ient use of examinat ion re sources and enhance the integra t ion of bank and hold ing

c o mpa ny e x a mina t io ns .

Coord ina t ion of inspect ions and examinat ions should focus on the use of

comm on f inan c ia l s t a tem en t d a te s where pos s ible and a l low for jo int d i scus s ions of

exam inat ion f ind ings with m anag em ent . It need not a lwa ys involve absolute

c o nc urre nc y , c o mm o n " a s o f " d a t e s or s im ul t a ne o us s t a r ting d a t e s . S t a g g e re d s t a r ting

da tes may b e ca l led in for c a se s where the bank examinat ion is l ike ly to t ake

s igni f icant ly longer than the bank hold ing company inspect ions , and for other rea sons .

The agen c ie s sha l l be required to co ndu ct coord in a ted bank hold ing

c o mpa ny in s pe c t io ns / l e a d ba nk e x a mina t io ns f o r :

(1) any bank holding com pan y with con solida ted ass et s in ex ce ss of $10 bil l ion;

(2) any bank holding com pany or bank holding com pany sub sidiary lead bank

ra t e d c o m po s i t e 4 or 5   under the Bank Hold ing Company Rat ing Sys tem or

the Uniform Interagency Rat ing Sys tem for banks ; and

(3) any bank holding com pany or bank holding com pany sub sidiary lead bank

ra ted com po s i te 3 whose f inanc ia l condit ion app ears to have worsened

s igni f ican t ly s ince the la s t inspect ion/ex am inat ion .

[Enc. Cir. No. 8719] (Over)

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The age n cies wi ll a t tem pt , to the exten t pos s ib le and where re sou rces perm it , to

coord inate examinat ions and inspect ions for a l l other bank hold ing companies with

prior i ty g iven to those hold ing com pan ies and/or subs id iary banks where c ircu m stan ces

indica te that such coord inat ion i s part icu lar ly des irab le .

Bank examinat ions for addit iona l subs id iary banks with in a mult ibank hold ing

com pany covere d above should be coo rd inated with the parent inspect ion to the exte nt

pr act ic ab le and where reso urc es wi ll perm it . In those mult ibank com pan ies without a

des ignated lead bank, the la rges t bank based on tota l a s se t s sha l l be cons idered the

lead bank for purpo ses of th is policy s ta tem en t .

In order to keep the Sta te bank regula tors aware of coord inated e f fort s by

the fed era l banking age nc ies and to encou rage part ic ip a t ion by the Sta te regu la tors ,

the Fed era l R eserv e or FDIC, resp ect iv e ly , should inform the app rop ria te Sta te bank

re g u la tor o f c oo rd ina t e d f e d e ra l e f f o r t s a f f e c t ing e i t h e r a b ank h olding c om pa ny or

Sta te bank under the jur i sd ic t ion of the Sta te bank regula tor .

Although th is s t a tem en t of pol icy i s intended to enhance interagen cy

ef f o rt s a t coord in at ing supervis ion of bank hold ing com pan ies , inc luding the ir bank

and nonbank subsidiaries , i t is not intended to preclude or prohibit any federal agency

from us ing i t s authori ty to examine organiza t ions ’ ’ a f f i l ia ted" with f inancia l

ins t i tu t ions for which i t has pr ima ry fed era l supervisory respons ib i l i ty .