- OCC imposed a penalty against City National Bank for unsafe practices.
- The bank has committed to strengthen infrastructure and systems.
The Royal Bank of Canada’s (RBC) American unit, City National Bank, was fined $65 million by the Office of the Comptroller of the Currency (OCC). This fine results from identified gaps in City National Bank’s risk management and internal controls, signaling a serious concern regarding the bank’s adherence to sound practices.
According to a report by Reuters, the OCC issued a cease-and-desist order, compelling the bank to undertake comprehensive corrective measures to fortify its strategic plan. The regulatory body has highlighted instances of unsafe or unsound practices within City National Bank, citing a failure to establish effective risk management and internal controls.
See Related: HSBC’s Canadian Unit Acquired By Royal Bank Of Canada
Cease-And-Desist Order
The OCC’s cease-and-desist order is a significant regulatory intervention, demanding City National Bank take swift and thorough actions to rectify the identified shortcomings. The order places a spotlight on the need for the bank to overhaul its strategic plan and implement measures to enhance its risk management practices.
In response to the OCC’s actions, City National Bank expressed its commitment to promptly address the issues outlined in the order. The bank emphasized its dedication to strengthening infrastructure and systems, aligning them with the institution’s size and business model. This proactive stance indicates City National Bank’s determination to navigate swiftly through the regulatory challenges.
Notably, in October, City National Bank disclosed a substantial capital injection of about $2.95 billion from RBC into its U.S. unit. This strategic move aims to bolster the bank’s capital and enhance profitability. RBC, in turn, assured that any realized losses at City National would be offset at the consolidated level.
