2 foreign banks pick up US severe enforcement actions in Q4'21

U.S. federal banking regulators have publicized six severe enforcement actions for the fourth quarter of 2021, making just 27 for the whole year. Even though a final count for 2021 will not be available until later this month, it is likely that last year's total will remain below 2019's 34 severe enforcement actions and mark a new post-Great Recession low.

On Nov. 8, the Federal Deposit Insurance Corp. issued a cease and desist order to Monterey, Calif. -based Monterey County Bank that requires the bank to maintain a 9% leverage ratio, a total risk-based capital ratio of 12% and tangible shareholder's equity equal to at least 7.5% of total tangible assets by March 31. As of Sept. 30, 2021, the bank's leverage ratio stood at 8.30%, its total risk-based capital ratio was at 15.54% and its tangible equity-to-tangible assets ratio was at 8.22%.

Days earlier, on Nov. 4, the FDIC issued an amended Prompt Corrective Action Directive to LaGrange, Ga.-based Community Bank & Trust - West Georgia, calling the bank "significantly undercapitalized." The directive states that the bank shall reduce its total assets by 10% from June 30, 2021 levels within 30 days of the directive, by 15% within 60 days and by 20% in 120 days.

The bank's total assets dropped a little over 4% between June 30 and Sept. 30, 2021, to $92.2 million. As of Sept. 30, the bank reported a 2.52% leverage ratio.

On Nov. 4, the Federal Reserve entered into a formal agreement with the New York branch of Industrial and Commercial Bank of China (USA) NA, a subsidiary of Industrial & Commercial Bank of China Ltd., the largest bank in the world by assets. The agreement highlights ICBC USA NA's deficiencies in credit risk management, corporate governance and management oversight, among other items.

On Oct. 26, the Federal Reserve issued a cease and desist order to MashreqBank PSC - New York Branch, a subsidiary of Dubai's Mashreqbank PSC, for international transactions primarily transmitted via Mashreq's London branch to its New York branch as well as other unaffiliated U.S. institutions that involved countries and individuals subject to sanctions between 2005 and 2009.

In addition, Mashreq agreed to a $100 million settlement with the New York Department of Financial Services on Nov. 9. The state regulator's press release went into more detail, stating that Mashreq transmitted over $4 billion over four years to parties tied to the country of Sudan, which was under U.S. sanctions at the time.