WASHINGTON The Office of the Comptroller of the Currency on Thursday warned banks that the risk of liquidity crises has risen in recent years and urged them to integrate analysis of liquidity needs into their contingency planning.
Meaningful contingency funding information is critical in todays operating environment, said Kathryn Dick, the agencys director of treasury and market risk. As banks increasingly rely on credit and rate-sensitive borrowers for marginal funding needs, robust scenario analysis is essential.
The OCC specifically addressed the liquidity risk associated with recent trends, such as increasing dependence on wholesale funding and the concentration of funding in fewer sources. It also warned that liquidity problems are inextricably related to other risks a bank may face, such as increased credit and reputational risk, and may either trigger or be triggered by such risks.
The guidelines were released as an addition to the Comptrollers Handbook and are available on the OCCs Web site at www.occ.treas.gov.