The evolution of the banking industry, including its continued consolidation, underscores the critical importance of effective inter-district coordination among the Reserve Banks. The Federal Reserve has had longstanding supervisory guidance addressing coordination of supervisory activities among the Reserve Banks. For banking organizations that operate in more than one district, it is particularly important that all relevant and significant supervisory findings are assessed and weighed in evaluating the consolidated banking organization and that a consistent and coordinated supervisory message is communicated to the organization. To achieve this objective, the System has long operated under the principle that there is one responsible Reserve Bank for each fully consolidated banking organization (i.e., each top-tier consolidated banking organization). This letter identifies the responsible Reserve Bank for a banking organization, highlights the role of the responsible Reserve Bank in inter-district coordination of banking supervision, and clarifies the roles and duties of the responsible and local Reserve Banks in conducting inter-district inspections and examinations.¹

The responsible Reserve Bank is accountable for all aspects of supervision of the fully consolidated banking organization, including all subsidiaries and affiliates (domestic, foreign, and Edge corporations) of the organization for which the Federal Reserve has supervisory oversight responsibility. The responsible Reserve Bank is generally expected to work with local Reserve Banks in conducting examinations and other supervisory activities, particularly where significant banking operations are conducted in a local district. Thus, for state member banks, the local Reserve Bank will continue to have an important role in the supervision of that subsidiary. However, the responsible Reserve Bank retains authority and accountability for the results of all examinations and reviews performed on its behalf.²

The responsible Reserve Bank for a banking organization generally has been the Reserve Bank in the district where the banking operations of the organization are principally conducted. Under this SR letter, for domestic banking organizations the responsible Reserve Bank typically will be the district where the head office of the top tier organization is located and its overall strategic direction is established and overseen. For foreign banking organizations, the responsible Reserve Bank typically will be the district where the Federal Reserve has the most direct involvement in the conduct of day-to-day supervision of the U.S. banking operations of the organization.

Where necessary, the Board's Division of Banking Supervision and Regulation (BS&R) in consultation with the Division of Consumer and Community Affairs (C&CA) may designate a responsible Reserve Bank when the general principles set forth above could impede the ability of the Federal Reserve to perform its functions under law, do not result in an efficient allocation of supervisory resources, or are otherwise not appropriate. Board staff will work with Reserve Bank staff to resolve specific instances where more than one Reserve Bank is currently sharing supervisory responsibilities for a consolidated banking organization.

The responsible Reserve Bank develops the consolidated risk assessment and supervisory plan and ensures that the scope and timing of planned activities among participating districts and agencies pursuant to the plan are appropriate given the consolidated risk assessment. The responsible Reserve Bank designates the central point of contact or lead examiner and ensures that all safety and soundness, information technology, trust, consumer compliance, Community Reinvestment Act (CRA), and other specialty examinations, inspections, and visitations are conducted and appropriately coordinated within the System and with other regulators. In addition, the responsible Reserve Bank manages all formal communications with the foreign and domestic supervised entity, including those involving supervisory assessments, ratings and remedial actions.³

A responsible Reserve Bank is encouraged to arrange for the local Reserve Bank to undertake on its behalf certain examinations or other supervisory activities to take advantage of opportunities to enhance supervisory effectiveness or efficiency. For example, use of the local district may reduce costs and can facilitate communication by leveraging existing relationships with local representatives of the organization or local supervisors. Additionally, local Reserve Banks may provide specialty examination resources, such as in the case of CRA examinations where local Reserve Bank staff often provide valuable insights into local communities and lending institutions that should be factored into the CRA assessment. When other districts conduct examinations and other supervisory activities for the responsible Reserve Bank, substantial reliance should be placed on the conclusions and ratings recommended by the participating Reserve Bank(s).

The responsible Reserve Bank retains authority and accountability for the results of all examinations and reviews performed on its behalf, and, therefore must work closely with local Reserve Bank examination teams to ensure that examination scopes and conclusions are consistent with the supervisory approach and message applied across the consolidated organization. Where a local Reserve Bank is directly conducting supervisory activities on behalf of the responsible Reserve Bank and it identifies major issues, those issues should be brought to the attention of the responsible Reserve Bank in a timely manner.

If a responsible Reserve Bank arranges for a local Reserve Bank to conduct supervisory activities on its behalf, the local Reserve Bank is responsible for the costs of performing the activities. If the local Reserve Bank is unable to fulfill the request from the responsible Reserve Bank to perform the specified activities, the responsible Reserve Bank should seek System assistance, if needed, by contacting Board staff or through other established resource coordination mechanisms.

The responsible Reserve Bank generally is charged with the collection and review of regulatory reports. However, if other arrangements are more practicable or consistent with long-standing practice, and if changing these arrangements would create inefficiencies or would result in increased regulatory burden, the responsible Reserve Bank may continue to use them. Thus, it is not envisioned that banking organizations would need to change the location where they currently file regulatory reports. Alternative arrangements should be clearly documented in writing by senior management at the affected Reserve Banks.

Application responsibilities are currently specified in Regulations Y, K, and H (12 CFR 225.3(b), 12 CFR 211.21(c), and 12 CFR 208.3(a)).

Questions regarding this letter should be directed to the appropriate officer in the Division of Banking Supervision and Regulation or the Division of Consumer and Community Affairs.