§ 3.121 Qualification process. ( a ) *Timing.* ( 1 ) A national bank or Federal savings association that is described in § 3.100(b)(1)(i) through (iv) must adopt a written implementation plan no later than six months after the date the national bank or Federal savings association meets a criterion in that section. The implementation plan must incorporate an explicit start date no later than 36 months after the date the national bank or Federal savings association meets at least one criterion under § 3.100(b)(1)(i) through (iv). The OCC may extend the start date.
( 2 ) A national bank or Federal savings association that elects to be subject to this appendix under § 3.100(b)(1)(v) must adopt a written implementation plan.
( b ) *Implementation plan.* ( 1 ) The national bank's or Federal savings association's implementation plan must address in detail how the national bank or Federal savings association complies, or plans to comply, with the qualification requirements in § 3.122. The national bank or Federal savings association also must maintain a comprehensive and sound planning and governance process to oversee the implementation efforts described in the plan. At a minimum, the plan must: ( i ) Comprehensively address the qualification requirements in § 3.122 for the national bank or Federal savings association and each consolidated subsidiary (U.S. and foreign-based) of the national bank or Federal savings association with respect to all portfolios and exposures of the national bank or Federal savings association and each of its consolidated subsidiaries;
( ii ) Justify and support any proposed temporary or permanent exclusion of business lines, portfolios, or exposures from the application of the advanced approaches in this subpart (which business lines, portfolios, and exposures must be, in the aggregate, immaterial to the national bank or Federal savings association);
( iii ) Include the national bank's or Federal savings association's self-assessment of: ( A ) The national bank's or Federal savings association's current status in meeting the qualification requirements in § 3.122; and
( B ) The consistency of the national bank's or Federal savings association's current practices with the OCC's supervisory guidance on the qualification requirements;
( iv ) Based on the national bank's or Federal savings association's self-assessment, identify and describe the areas in which the national bank or Federal savings association proposes to undertake additional work to comply with the qualification requirements in § 3.122 or to improve the consistency of the national bank's or Federal savings association's current practices with the OCC's supervisory guidance on the qualification requirements (gap analysis);
( v ) Describe what specific actions the national bank or Federal savings association will take to address the areas identified in the gap analysis required by paragraph (b)(1)(iv) of this section;
( vi ) Identify objective, measurable milestones, including delivery dates and a date when the national bank's or Federal savings association's implementation of the methodologies described in this subpart will be fully operational;
( vii ) Describe resources that have been budgeted and are available to implement the plan; and
( viii ) Receive approval of the national bank's or Federal savings association's board of directors.
( 2 ) The national bank or Federal savings association must submit the implementation plan, together with a copy of the minutes of the board of directors' approval, to the OCC at least 60 days before the national bank or Federal savings association proposes to begin its parallel run, unless the OCC waives prior notice.
( c ) *Parallel run.* Before determining its risk-weighted assets under this subpart and following adoption of the implementation plan, the national bank or Federal savings association must conduct a satisfactory parallel run. A satisfactory parallel run is a period of no less than four consecutive calendar quarters during which the national bank or Federal savings association complies with the qualification requirements in § 3.122 to the satisfaction of the OCC. During the parallel run, the national bank or Federal savings association must report to the OCC on a calendar quarterly basis its risk-based capital ratios determined in accordance with § 3.10(b)(1) through (3) and § 3.10(d)(1) through (3). During this period, the national bank's or Federal savings association's minimum risk-based capital ratios are determined as set forth in subpart D of this part.
( d ) *Approval to calculate risk-based capital requirements under this subpart.* The OCC will notify the national bank or Federal savings association of the date that the national bank or Federal savings association must begin to use this subpart for purposes of § 3.10 if the OCC determines that: ( 1 ) The national bank or Federal savings association fully complies with all the qualification requirements in § 3.122;
( 2 ) The national bank or Federal savings association has conducted a satisfactory parallel run under paragraph (c) of this section; and
( 3 ) The national bank or Federal savings association has an adequate process to ensure ongoing compliance with the qualification requirements in § 3.122.
[78 FR 62157, 62273, Oct. 11, 2013, as amended at 86 FR 731, Jan. 6, 2021]