WASHINGTON – The Office of the Comptroller of the Currency has moved forward on a plan to require large banks to establish recovery plans – a type of self-administered stress test to be shared with the agency.

Affecting financial institutions with $50 billion or more in assets, the final rule asks banks to plan for potential stressful events continually, with plans to be updated every year as needed.

The recovery planning process will be inserted into the agency's normal supervision process, according to the rule issued Thursday. "OCC examiners will assess the appropriateness and adequacy of a covered institution's ongoing recovery planning," the agency said.

If a bank's plan is unsatisfactory to the OCC, the agency could deliver a warning or a formal order. Failure to comply with an order could trigger fines.

Financial institutions will have to comply according to a phased-in schedule. Banks that hold $750 billion or more in assets will go first, starting in July 2017.

Similar to the instructions of the Federal Reserve and Federal Deposit Insurance Corp. for firms working on resolution plans – known as living wills – the OCC stressed that banks' recovery plans should be unique for each firm.

"An institution's recovery plan should be integrated into its overall risk governance framework," said the OCC in a statement accompanying the rule. "It should be specific to that institution, aligned with the institution's other plans, and coordinated with its holding company's recovery and resolution planning."

The OCC appeared to offer some wiggle room for banks on the question of whether the recovery plans could incorporate information from stress tests already imposed by regulators, like the Fed's Comprehensive Capital Analysis and Review.

A bank, the OCC said, would have to consider "whether different or additional scenarios are appropriate," depending on whether pre-existing stress tests present scenarios that "bring the bank to the brink of resolution."

Still, the agency maintained that the recovery plans should be viewed as entirely separate from living wills and other planning processes.

"While we encourage covered banks to leverage their existing processes," it said, "in most cases, it is unlikely that a covered bank will be able to use a plan prepared for another purpose or entity to satisfy" the rule.

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