OCC details federal banking system concerns in Semiannual Risk Perspective

WASHINGTON – The Office of the Comptroller of the Currency last week reported its top concerns for the federal banking system, including strategic, credit, operational and compliance risks.

The findings were released as part of the regulator’s Semiannual Risk Perspective for Spring 2017.

“Today, the federal banking system remains healthy. As outlined in the report, however, the OCC again identifies issues related to strategic, credit, operational and compliance risks as top concerns,” said Keith A. Noreika, acting comptroller of the currency. “While these are risks that the system faces as a whole, we note that the risks differ from bank to bank based on size, region and business model.”

Highlights from the report include elevated strategic risks, as banks face competition from nonfinancial firms, including financial technology firms, known as fintech.

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“This competition is causing changes in the way customers and financial institutions approach banking,” according to the report.

The report also notes a loosening of underwriting standards for commercial and retail portfolios, noting a transition from conservative to an “increasing risk appetite as banks strive to achieve loan growth and maintain or grow market share.”

Cyberthreats and third-party service providers are buoying operational risks, while compliance risk remains high, as “banks continue to manage money-laundering risks and implement changes to comply with the amended customer protection requirements under the Military Lending Act and integrated mortgage disclosure rules,” according to the report.

The report looked at data based on the year ended Dec. 31, 2016.

The full report can be found HERE.

Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.