The Office of the Comptroller of the Currency will overhaul its supervision of community and midsize banks, including designating one deputy comptroller responsible for overseeing “novel banks and technology service providers,” according to a memo obtained by American Banker.
The changes will put a bigger emphasis on supervising fintech and cryptocurrency, as well as creating flexibility the agency might need to account for consolidation of small banks. The reorganization will take effect Oct. 1.
“This is a significant restructuring of the midsize and community bank department,” said Daniel Stipano, a partner at Davis Polk and a 30-year veteran of the OCC. “It’s recognizing the changes that have taken place in the industry, particularly those due to technology and consolidation.”
The OCC was not able to provide an official for an interview by press time.
The agency is designating a deputy comptroller for the supervision of “novel banks and technology service providers,” according to the memo.
“This will provide a coordinated and consistent approach to supervising these institutions, which have specialized and unique business models,” the memo said.
The issue of novel banks and technology service providers is growing in importance to the OCC and other bank regulators, as the popularity of digital assets soars and partnerships between banks and fintechs become more prevalent. The Biden administration has
The OCC is also abandoning its district structure for overseeing community banks, according to the memo. The agency will remove its existing four district boundaries, which are currently the Central, Southern, Northeastern and Western districts.
Instead, it will create six regions: Northeast, Central/Mid-Atlantic, South, Southeast, Midwest and West.
Currently, each of the OCC’s four districts has one deputy comptroller. The OCC said its model is “fragmented,” and presentation materials about the change stressed that the community and midsize bank examiners will “operate as one team.” Under the new system,there will be one assistant deputy comptroller per region; they will report to three deputy comptrollers.
In addition, the existing deputy comptroller post in charge of midsize bank supervision would remain. Starting July 17, that deputy comptroller will also supervise trust banks.
This could affect how some banks are examined.
“Some banks may be examined by different people and different offices, and possibly with a different approach,” Stipano said.
In addition to the community banks and novel bank changes, the OCC will create a Risk, Resources & Examiner Development unit “to better inform and support supervision.”
The agency said it will also centralize its district and midsize operations staff, “which will promote further consistency.”
The changes will not result in any layoffs, and won’t cause any changes in work locations, but will create more than 20 new positions, according to the memo.
