BANK INTERVENTION
and
RESOLUTION:
Part 3
United States Department of the Treasury
Office of Technical Assistance
Banking & Financial Services
Advance Preparation Intervention
• Both bank intervention and resolution advance
preparation should be conducted concurrently.
Legal – Advance Preparation
• Prepare notices and other legal documents
regarding appointment of the Conservator or
Receiver
• File at the appropriate court
Conservator or Receiver
• Failed bank employee retention strategy
• Appropriate Delegations of Authority and Powers
of Attorney have been issued
Bank Intervention Manager
• Main function is managing and coordinating all
intervention team members to assure that the
intervention goes as smoothly as possible.
• He can delegate many of the functions to others;
however, the BIM bears ultimate responsibility to
assure completion of intervention activities as
required.
Function Area Teams
• Review the Information Package for items in the
functional area
• Determine staffing, supplies, equipment and
security needs.
Accounting
• Review P&A for asset and liabilities splits with
Assuming Bank.
• Review bank’s financial reports.
• Determine the staffing required.
• Determine the computer equipment/software,
and the supplies required to perform the
accounting function.
• Attend pre-intervention function managers
meetings and other meetings as applicable.
Asset Team
• Review bank’s financial reports to determine
types and amounts of assets
• Determine the staffing required for the
intervention.
• Determine the computer equipment/software,
and the supplies required to perform the Asset
intervention function.
Branch Operations
• Identify the number of branches and the
Institution contact person at each branch.
• For branches located abroad, contact Legal
to secure the services of an experienced
banking attorney in each country prior to the
intervention.
• Determine the staffing requirements of each
branch.
Branch Operations
• Instruct each branch manager to check in during
the first hour of the intervention to report status
and problems.
• Obtain the address, directions to, phone
number, and fax number of the branch.
Deposit Operations Team
• Perform a preliminary insurance determination
according to governing deposit insurance law.
• Identify any politically sensitive depositors such
as churches, charitable or religious organization,
public units unsecured, fully insured and/or fully
secured.
Facilities
• Ensure necessary supplies, forms and
documents are available.
• Arrange for an official seal, tape or other means
to control drawers, and use labels for inventory,
etc.
Facilities
• As needed, arrange for intervention meetings
with the team managers and/or entire
intervention team.
• Determine if the failed bank’s existing facilities
has the capacity to accommodate the
intervention team. Arrange for additional work
space if necessary (e.g. hotel conference
rooms).
Security
• Meet with contracted Security Guard firm or
police
• Provide instructions
• Determine locations and assignments.
Information Technology
• If possible, the IT Manager should visit the failing
institution to help prepare data files, equipment,
and information needed for the intervention. He
can use this opportunity to gather additional
information and resolve unanswered questions
where possible.
• Determine capability of stopping accruals, when
to expect the download files, report generation
capability, delivery logistics, and staffing.
Information Technology (cont)
• Coordinate with BIM regarding the important
information itemized on the IT checklist, e.g.:
• When do accruals cut off?
• Can we place holds on accounts?
• Has the bank been servicing loans for any
other banks? etc.
Legal Team
• Review the bank inspection report
• Prepare the proper legal order (i.e.,
Conservatorship or Receivership) as required by
law
• Meet with the members of the
receivership/liquidation team to review the
strategy for the process
• Provide the Bank Intervention Manager with
copies of applicable transaction documents
(e.g., P&A) once a bid has been accepted
Legal Team (cont)
• Review major contracts and agreements as requested
by the Conservator/Receiver or the Bank Intervention
manager (including letters of credit, open credit lines,
unfunded and partially funded commitments, etc.).
• Accompany the Conservator/Receiver, the Bank
Intervention Manager, and the representative from the
applicable Supervisory Authority when the proper legal
notice (i.e., Conservatorship or Receivership) is served
on the bank.
• Make sure that the notice is published in accordance
with the Law
Personnel
• Prepare sign in/out sheets for both
Intervention Team and failed bank
employees.
• Prepare timesheets for failed bank
employees to use (unless theirs are
acceptable).
Public Awareness
• Well before any problem bank action,
Communications Departments from both the
Supervisory Authority and the DGF should
diligently coordinate information and control
information through one spokesperson.
Public Awareness
• When the bank is closed and the Supervisory
Authority appoints a Receiver, the Supervisory
Authority issues a press release to inform the
public
• The press release should stress that the action
is being taken to minimize the impact of a bank
failure on the local economy, by finding an Agent
Bank to handle deposits, and transferring assets
into the private sector.
Public Awareness
Possible follow-up questions should be anticipated
and answers prepared
• Why has the Supervisory Authority decided to
close the bank?
• What will happen to clients/depositors?
• Will any depositors lose their funds?
• What will happen to borrowers (loan clients)?
• Etc.
Public Awareness
Prior to any bank failures, the authorities should coordinate
in developing a media and depositor education plan that
answers, at a minimum, the following questions:
• Where will insured deposits be paid?
• Is there an acquiring bank to act as paying agent?
• Will all branch facilities be open for payment?
• When will deposits be paid (or be made available)?
• What information must an insured depositor provide to
obtain payment
• What happens to my loan?
• Must I continue making payments?
Primary Goals of Bank
Intervention
• A bank intervention is a process driven
function consisting of two primary areas:
• Secure, Inventory and Control
• Reconcile and Balance
Secure, Inventory and Control
•
•
•
•
•
•
Loan and deposit files and records
Collateral documents
Accounting records
IT systems
Legal documents
Board and committee minutes and records
Secure, Inventory and Control
•
•
•
•
•
Cash and liquid assets
Vaults
Bank building and branches
Furniture, fixtures and equipment
Vehicles
Reconcile and Balance
• Balance and reconcile each general ledger line
item account as of the time of closing
• Create a final Pro Forma balance sheet with
adjustments for:
• Changes since month end
• Assets and liabilities not properly reflected on books
• Undisclosed liabilities
Reconcile and Balance
• Emphasis on deposit accounts in order to begin
payment of insured deposits within (5) five days
of bank closing
• Have all reconciling and balancing complete
within (90) days of closing
• This process cannot begin until all things
secured, inventoried and controlled
Immediate Actions at Intervention
Intervention Steps
• Immediately prior to intervention, the Bank
Intervention Manager will conduct an
intervention team meeting to go over the
plans. At this time, the Bank Intervention
Manager will go over the initial responsibilities
for each team member. Any extra or special
responsibilities will be assigned to the
appropriate Function Manager.
Immediate Actions at Intervention
The initial Intervention team consists of:
• Bank Intervention Manager
• Senior officials of the Supervisory Authority
• Legal Adviser
• Conservator or Receiver
• Facilities/Security Function Manager, along with
any other necessary security personnel
Immediate Actions at Intervention
•
•
The initial intervention team enters the
bank and meets with key bank officials
The designated Supervisory Authority
official explains what is taking place,
and presents the intervention order to
the general director
Immediate Actions at Intervention
•
The designated official advises the
general director of the appointment of
and introduces the Conservator or
Receiver, and relieves the general
director and selected management of
their authority and responsibilities.
Immediate Actions at Intervention
•
•
The general director and problem
management personnel should then be
escorted from the premises
Ensure that the bank intervention
notification is posted on the door.
Immediate Actions at Intervention
Security Team:
•
•
•
The Security Function Manager should immediately
take control of SWIFT and/or other wire transfer
facilities
The Security Function and IT Managers should
ensure that ATMs are disabled and applicable
networks notified
All the night depositories should be locked and/or
sealed, with official notices posted on them. Any
night depositories must be emptied and the
contents inventoried under dual control and work
processed by the Accounting team.
Immediate Actions at Intervention
Security Team (cont):
• The initial intervention team must keep the key bank
officials under control. Do not allow anyone to leave
the meeting, make a phone call or issue any
instructions, as they may be detrimental to the bank.
• Depending on the nature of the bank’s problems (i.e.
responsibility of key bank management for the bank’s
problems), the former key bank management may be
escorted out of the bank.
Immediate Actions at Intervention
Security Team (cont):
• In this case, they are not allowed to remove any
items, personal or otherwise. The intervention team
will inventory their offices and take control of anything
important to the bank’s business. The Bank
Intervention Manager or Conservator or Receiver will
arrange for any personal items to be delivered later.
Immediate Actions at Intervention
• The Bank Intervention Manager then notifies
the remaining intervention team members to
enter the bank and commence their
assignments. Intervention team members
with branch operations responsibilities can
coordinate by phone.
• Initial intervention team meets with remaining
management, notifies them of the revocation
of all authority and their new reporting
responsibilities.
Immediate Actions at Intervention
• Team members enter the bank. Each Function
Manager immediately commences a meeting
with bank staff in his/her assigned area. If the
bank has a small number of staff, this meeting
may be held with all bank employees at one time
or the Bank Intervention Manager may have
already held it.
Critical Actions at Intervention
• Ensure that everything concerning the ongoing operation is under control, including:
•
•
•
•
•
•
•
SWIFT or other wire transfer facilities
Cash
Loan notes, collateral and other documentation
Deposit files and documentation
Fixed assets and cars, etc.
Other assets documentation
Telephones, including Fax machines
Critical Actions at Intervention
•
•
•
Cash must be counted
Offices, desks and storage areas, such
as drawers, file cabinets, etc. must be
secured and inventoried. If inventory
cannot be accomplished immediately the
storage areas must be secured.
Personal computes must be secured to
prevent deletion of important files
Critical Actions at Intervention
• The Security Function Manager must collect the
bank’s official stamps, seals, and any other
evidence of authority for bank. These must be
inventoried and secured, with notification given
to the proper authorities.
• General ledger must be reconciled, balanced
and posted to date, etc.
Critical Actions at Intervention
•
The Supervisory Authority must prevent any
loss, destruction or manipulation of records,
assets or liabilities. The Function Managers
must be alert to potential problems with
employees such as abuses, vandalism of
documentation or systems and similar
problems.
Critical Actions at Intervention
•
Immediately advise other affected parties
(payment system, clearing system,
correspondent banks, etc.) of the intervention,
revocation of previous management’s
authorities, and transfer of authority to
Supervisory Authority.