Related Organizations

Identification of Related Organizations

To fully understand the risks related organizations pose to a bank, the examiner must determine the lines of business in which those related organizations engage, and determine the nature of the relationship between those related organizations and the bank. This information, coupled with information from other regulators, serves as the foundation for performing a consolidated risk analysis. Examiners should ask the bank to provide a list of its related organizations and identify those related organizations that have transactions with the bank. To facilitate the identification of related organizations, examiners should discuss related entities with various members of the bank’s staff including management, legal staff, internal/external auditors, and the examiner liaison.

Additional sources of information include the bank’s financial statement, the bank’s annual report, bank holding company reports, shareholder lists, board of directors’ meeting minutes, internal/external audit reports, OCC’s corporate activity information system, OCC’s supervisory information system, FRB holding company inspection reports, and state reports of bank holding company activities. Information about related organizations and interlocking directorates and officers also may be obtained from SEC forms 10-K and 10- Q or other required domestic and foreign regulatory reports.

Information on business interests of directors and principal officers of the bank can be obtained by reviewing information maintained in accordance with Regulation O. By reviewing this information, the examiner should be able to identify all credit relationships between the bank and related interests of those directors and officers, to determine whether the bank’s loans to the related interests are within statutory limits, and to decide whether they are fair and reasonable from the bank’s standpoint. Refer to the "Insider Activities" booklet of the Comptroller’s Handbook for more information about directors, executive officers, principal shareholders, and their related interests.

Examiners may find it especially difficult to obtain information about foreign investments, statutory subsidiaries, and companies in which the bank has a noncontrolling interest. If additional information is necessary to assess risk posed by related organizations, the examiner should request that sufficient information be obtained during the examination to allow for an informed evaluation.

While GLBA limits the ability of an examiner to request information directly from functionally regulated entities, examiners may seek information about an FRE’s risks from the bank’s oversight and risk management system.

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