WASHINGTON Effective July 1, the Office of the Comptroller of the Currency will raise its fees for all institutions with composite Camels ratings of 3 or worse and will increase the exam fees paid by independent credit card banks, the agency said Friday.
The OCC currently computes its surcharge on poorly rated banks by increasing the asset-based element of its assessment, by 25% for banks with Camels ratings of 3, 4, or 5. The agency is expanding the surcharge formula to include all elements of the banks assessment and increasing the percentage. Banks rated Camels 3 would be charged 50% more than a bank of similar size and structure with a 1 or 2 rating. Banks rated 4 or 5 would be charged 100% more than comparable institutions rated 1 or 2.
The Camels system grades institutions on six factors: capital, asset quality, management, earnings, liquidity, and sensitivity to risk. Performance is rated on a scale of 1 to 5, with 5 being the worst. At yearend 2000, 80% of all commercial banks held one of the top two Camels ratings. Approximately 19% were rated Camels 3 with the remaining banks rated 4 or 5.
The agency is also changing the way it assesses independent credit card banks. If a banks primary business is credit card operations and it is not affiliated with a full-service national bank, then it will be subject to an additional assessment based on its off-balance sheet assets. Currently, all credit card banks pay exam fees based only on balance sheet assets.
A credit card banks balance sheet is not generally a meaningful measure of the resources the OCC must expend to supervise this type of bank, nor is it a fair measure of the value of the national bank charter to the enterprise, the agency explained.