Today the federal bank regulatory agencies (FDIC, Federal Reserve, OCC and OTS) issued final guidance on correspondent concentration risk (CCR Guidance). The CCR Guidance addresses the risks associated with funding and credit concentrations arising from correspondent relationships (when one financial organization provides another financial organization with services related to deposits, lending, or other activities).
The CCR Guidance focuses on the agencies’ expectation that each institution appropriately identify, monitor, and manage correspondent concentration risk on both a specific credit/funding basis and an organization-wide basis as part of its ongoing prudent risk management policies and procedures. This analysis should take into consideration exposures of the institution and/or its affiliates to the correspondent and/or the correspondent’s affiliates. As mentioned in the report, this CCR Guidance does not supplant or amend applicable regulations such as Limitations on Interbank Liabilities (Regulation F).