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Revised bank holding company rating system

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Abstract

1 Federal Reserve System Docket No. OP-1207 Bank Holding Company Rating System AGENCY: Board of Governors of the Federal Reserve System. ACTION: Notice. SUMMARY: The Federal Reserve has revised its bank holding company (BHC) rating system to better reflect and communicate its supervisory priorities and practices. The revised BHC rating system emphasizes risk management; implements a comprehensive and adaptable framework for analyzing and rating financial factors; and provides a framework for assessing and rating the potential impact of the nondepository entities of a holding company on the subsidiary depository institution(s). DATES: The revised rating system will be applied to all BHC inspections beginning on or after January 1, 2005, as well as to inspections opened in 2004 and closed in 2005, at the discretion of the Reserve Bank. FOR FURTHER INFORMATION CONTACT: Deborah Bailey, Associate Director, (202-452-2634), Barbara Bouchard, Deputy Associate Director, (202-452-3072), Molly Mahar, Senior Supervisory Financial Analyst, (202-452-2568), or Anna Lee Hewko, Supervisory Financial Analyst, (202-530-6260). For users of Telecommunications Device for the Deaf (“TDD”) only, contact (202) 263-4869. SUPPLEMENTARY INFORMATION: Background On July 23, 2004, the Federal Reserve published a notice in the Federal Register (69 FR 43996) requesting comment on proposed revisions to the BHC rating system. The BHC rating system is an internal rating system used by the Federal Reserve as a management information and supervisory tool that defines the condition of all BHCs, including financial holding companies (FHCs), in a systematic way. First and foremost, a BHC’s rating provides a summary evaluation of the BHC’s condition for use by the supervisory community. Second, the BHC rating forms the basis of supervisory responses and actions. Third, the BHC rating provides the basis for supervisors’ discussion of the firm’s condition with BH

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