Seal of the Board of Governors of the Federal Reserve System
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM

WASHINGTON, D. C.  20551

DIVISION OF BANKING
SUPERVISION AND REGULATION

SR 99-29 (SUP)
October 29, 1999

TO THE OFFICER IN CHARGE OF SUPERVISION
          AT EACH FEDERAL RESERVE BANK


SUBJECT: Submission of Documents to the Central Document and Text Repository in Support of the Banking Organization National Desktop

                     The purpose of this letter is to finalize the scope of documents to be submitted to the Central Document and Text Repository (CDTR) in support of the Banking Organization National Desktop (BOND) and the timing of their submission.  This letter applies primarily to processes that need to be put in place for the April 2000 BOND/CDTR implementation.

                     As noted in AD letter 98-36, BOND will facilitate the high degree of information sharing and ongoing collaboration necessary to support the supervision of banking organizations covered by the framework for risk-focused supervision of large complex institutions.1  It will expand on the capabilities of the Large Bank and FBO Desktops to provide immediate, user-friendly access to a wide range of internal and third party information and other decision-support tools.  The CDTR, as part of the National Information Center, is a major step in fulfilling the goals of risk-focused supervision by providing a secure means of sharing and collaborating on documents on a nationwide basis.

                     The implementation of the CDTR will be synchronized with Phase I of BOND scheduled for April 3, 2000.  Beginning on that date, all BOND-related documents, as defined further in this letter, should be submitted to the CDTR via BOND.  The only historical documents to be included in the CDTR will be those that are transferred directly from the Large Bank and FBO Desktops by the BOND development staff.  BOND organizations include:  foreign banking organizations (FBOs) and their subsidiaries and offices in the United States; U.S. banking organizations (USBOs) with assets greater than $10 billion and their subsidiaries; and USBOs with assets less than $10 billion that are subject to the requirements of the framework for risk-focused supervision of large, complex institutions.

                     Consistent with the risk-focused programs for large complex institutions and foreign banking organizations, the initial stage of the BOND/CDTR project will include documents related to countries, regions, and risk factors, as well as all examination and inspection and enforcement action documents for the BOND population.  The country grouping will include documents pertaining to the banking system, accounting practices, and economic condition of a country.  The region documents pertain to economic or environmental factors related to a domestic or international region.  The risk grouping will include documents related to legal, credit, reputational, liquidity, operational, market, or overall risk, and the potential impact across institutions, countries, or regions.

CDTR/BOND Processes

                     Continuous supervision, collaboration in decision-making, and sharing of time sensitive information is necessary among the Federal Reserve System and other state and federal supervisory agencies.  The CDTR will be the document repository to support such collaboration.  Effective with the implementation of the CDTR, Phase I risk-focused documents, examination/inspection-related documents and enforcement actions for the BOND population must be entered into the CDTR via the BOND application.  Changes in the current business process that will foster increased collaboration and communication among System staff are specified below.

                     Each report of examination or inspection and its related documents will be associated with a NED event number.  The documents that are linked by a common examination or inspection event are the scope memorandum, the entry letter, the examination or inspection report itself, the transmittal letter, management response to the transmittal letter and any internal memoranda or other documents related to an examination or inspection event.

                     Documents relating to a single enforcement event also must be linked together and associated through the NED event number.  This NED event number must be established as soon as the enforcement action is initiated, as required by NED entry guidelines.  The enforcement-related documents that will be linked by a NED event number are the initial referral memorandum, the enforcement action document, memoranda detailing the institutions' compliance with the action and any related correspondence between the Federal Reserve and the institution.

                     Due to the linkage between NED event numbers and these CDTR document types, emphasis must be placed on establishing event numbers early in the examination process.  Without the NED event numbers, examination or inspection and enforcement related documents cannot be entered into the CDTR.2  This information should be entered into NED as soon as it becomes available, such as in the course of preparing the inspection or examination program, or no later than the date upon which the entry letter is transmitted to the targeted institution.

Documents to be Submitted

                     Several categories of documents are listed below with an indication of whether they are currently submitted through the Large Bank and FBO desktops.  Presumably, processes in place for such documents would require less modification than for documents not currently subject to electronic submission.  As explained at the outset of this letter, all of the documents referred to below refer to organizations covered by the System's risk-focused framework for supervising large complex institutions and the U.S. operations of foreign banking organizations. 

                     Supervisory documents that are currently captured in the Large Bank and FBO Desktops will continue to be captured in BOND.3  The following list identifies such documents:

  • Accounting Practices
  • Briefing Material
  • Correspondence to and from the Institution
  • Economic Review
  • Examination Program
  • Financial System -- Full
  • Home Country Cover Letter
  • Institutional Overview - Full
  • Risk Assessment - Full
  • Risk Matrix
  • SOSA -- Full
  • Summary of Condition
  • Supervisory Plan
  • Trip Report

                     In addition to the documents listed above, several documents have been required by the existing risk-focused framework, but were not previously included in the Large Bank and FBO desktops.  BOND will require that all documents pertaining to the large complex institutions and FBO risk-focused programs be captured.  These additional documents include:

  • Banking System Update
  • Commitments
  • Credit Risk Documents
  • Enforcement Events
  • Examination and Inspection Events
  • Institutional Overview --Virtual4
  • Legal Risk Documents
  • Liquidity Risk Documents
  • Market Risk Documents
  • Meeting Minutes
  • Open Issues
  • Operational Risk Documents
  • Presentations
  • Quarterly Supervisory Overview
  • Reference Materials
  • Reputational Risk Documents
  • Risk Assessment -- Virtual

                     Supervisory documents that support enforcement action events not previously submitted through Large Bank and FBO, but required to be entered into the CDTR though BOND are:

  • Compliance Memorandum
  • Correspondence to and from the Institution
  • Enforcement Action Document
  • Other Memorandum
  • Referral Memorandum

                     In addition to enforcement event documents, examination and inspection related documents should be entered into the CDTR through BOND.  Documents associated with an examination or inspection event are:

  • Entry Letter
  • Examination and Inspection Reports
  • Internal Memorandum
  • Management Response
  • Other document(s)
  • Scope Memorandum
  • Transmittal Letter

Completeness of Information for BOND Institutions

                     The availability of complete information pertaining to large complex institutions and FBOs is critical.  To assemble and maintain a comprehensive source of information it is necessary to capture documents that are not in electronic form (e.g. correspondence from the institution, examination reports from other supervisory agencies.)  Most likely that will be done through a combination of expanding our capabilities of receiving or accessing information electronically from supervised entities and our regulatory counterparts, and making use of scanning technology to fill those gaps.  Currently, several Reserve Banks have scanning capabilities to varying degrees.  Reserve Banks that have such capabilities are encouraged to provide assistance in developing a Systemwide strategy for addressing this information gap, and serving as "early adopters" of scanning for the BOND/CDTR program.  With regard specifically to the large complex institutions and FBO supervision programs, the business objective of the CDTR is to have substantially complete information available by April 2001 through a combination of the processes described above.  At a minimum, therefore, the Supervision Information Technology Operating Plan for 2000 will need to address this information gap for large complex institutions and FBOs.

Training

                     As part of the initial BOND/CDTR effort, there will be a training session concerning the CDTR for Federal Reserve staff.  In March 2000, individuals at each Reserve Bank will be instructed on the method of profiling and entry of documents into the CDTR using the BOND interface.  This train-the-trainer session will be conducted at the Board.  In anticipation of the training session please ensure that all supervision staff receive this correspondence.

                     A dictionary containing definitions of the document types is incorporated into the BOND Users' Manual.  The URL for this information is http://m-frbnotes1.frb.gov/bonddocs.  Additionally questions may be directed to Bill Schneider, NIC Project Director, at 202-452-2596 or Adrienne Munroe, Supervisory Financial Analyst, at 202-452-3833.


Stephen C. Schemering
Deputy Director


Cross-References:   SR letter 99-17
SR letter 97-24
AD letter 98-36



Notes:

1.   Refer to SR letter 97-24 “Risk Focused Framework for Supervision of Large Complex Institutions” (referred to as the “Green Book”).  Return to text

2.   Refer to SR letter 99-17 “Supervisory Ratings for State Member Banks, Bank Holding Companies and Foreign Banking Organizations, and Related Requirements for the National Examination Data System.”  Return to text

3.   Due to the nature of the FBO population with a direct U.S. presence, there are three types of documents that have a defined comment period and must be entered in draft form.  These documents are 1) financial system review, 2) Strength of Support Assessment (SOSA), and 3) Summary of Condition document.  Return to text

4.   Virtual documents refer to continually updated scripts that are partitioned into sub-documents that enable one part of the virtual document to be updated without having to edit the entire document.  For example, Institutional Overview – Virtual has as its sub-document types: Current Condition, Issues/Initiatives, Structure/Overview. Risk Assessment – Virtual has component parts of Credit, Legal, Liquidity, Market, Operational, Overall and Reputational.  Return to text


SR letters | 1999