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Subject: Uniform Retail Credit Classification and Account Management Policy
Date: June 20, 2000
To: Chief Executive Officers of National Banks, Department and Division Heads, and All Examining Personnel
Description: Policy Implementation
The guidance attached to this bulletin continues to apply to federal savings associations.
On June 12, 2000 the Federal Financial Institutions Examination Council published in the Federal Register a final notice that revised the Uniform Retail Credit Classification and Account Management Policy originally published in the Federal Register on February 10, 1999. The Office of the Comptroller of the Currency is adopting the revised policy and will apply it to all national banks and their operating subsidiaries. OCC Bulletin 99-13 is hereby rescinded.
The policy establishes standards for classification and account management of retail credit in banks and thrifts. It generally requires that closed-end loans be charged off when 120 days past due and that open-end credit be charged off when 180 days past due. Other important provisions of the policy include:
The final policy contains revisions adopted in response to comments and requests for clarification from the banking industry and consumer groups. The final policy:
The policy allows examiners to classify retail credits that exhibit signs of weakness regardless of their delinquency status, and to classify entire retail portfolios where underwriting standards are weak and present unreasonable credit risk.
The policy should be fully implemented for the reporting period ending December 31, 2000.
Re-aging of open-end loans that occur prior to implementation do not count toward the once-in-twelve months/twice-in-five years limitation. However, examiners should review a bank’s record of re-aging accounts to ensure that the use of this practice was not excessive prior to the implementation date.
For further information contact the Credit Risk Division, (202) 874-5170.
David D. Gibbons