Featured Product

    US Agencies Propose a Rule to Limit Interconnectedness of Large Banks

    April 08, 2019

    US Agencies (FDIC, FED, and OCC) proposed a rule to limit the interconnectedness of large banking organizations and reduce the impact from failure of the largest banking organizations. The proposed rule would address an advanced approaches banking organization’s regulatory capital treatment of an investment in unsecured debt instruments issued by foreign or U.S. global systemically important banking organizations (G-SIBs) for the purpose of meeting minimum total loss-absorbing capacity (TLAC). Consequently, FED is also proposing changes to regulatory reporting requirements in form FR Y-9C. Comments must be received by June 07, 2019.

    Under the proposal, investments by an advanced approaches banking organization in unsecured debt instruments would be subject to a deduction from the advanced approaches banking organization’s own regulatory capital. The proposal would also require the holding companies of G-SIBs to publicly report their TLAC debt outstanding. FED is also proposing to require that banking organizations subject to minimum TLAC and long-term debt requirements under its regulations publicly disclose their TLAC and long-term debt issuances in a manner described in this proposal. With respect to the reporting form FR Y-9C, FED is proposing to modify the instructions for tier 2 capital deductions. In a future interagency reporting proposal, US Agencies would propose to modify the Call Reports FFIEC 031, FFEIC 041, and FFIEC 101 in a manner consistent with the changes to form FR Y-9C. 

    US Agencies are issuing this proposal to recognize, for purpose of the capital rule, the systemic risks posed by banking organizations’ investments in “covered debt instruments” and to create an incentive for advanced approaches banking organizations to limit their exposure to G-SIBs. The deductions that would be required under the proposal would affect the capital ratios of advanced approaches banking organizations—that is, the risk-based capital ratios that include “standardized total risk-weighted assets” and “advanced approaches total risk-weighted assets” in the denominator of the ratios—along with the leverage ratio and the supplementary leverage ratio. US Agencies believe the proposed rule will have relatively small effects on advanced approaches banking organizations. The proposal is also expected to enhance resilience and resolvability of advanced approaches banking organizations if an entity required to issue long-term debt or TLAC fails, or encounters material financial distress.

     

    Related Links

    Comment Due Date: June 07, 2019

    Keywords: Americas, US, Banking, G-SIB, Regulatory Capital, TLAC, Systemic Risk, Advanced Approaches, Reporting, FR Y-9C, Unsecured Debt, Long-Term Debt, US Agencies

    Featured Experts
    Related Articles
    News

    HKMA Urges Early Action for Adherence to IBOR Fallbacks Protocol

    HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.

    October 16, 2020 WebPage Regulatory News
    News

    FSB Sets Out Roadmap for Transition to Alternative Reference Rates

    FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).

    October 16, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on BRRD2 Transposition

    HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).

    October 15, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on CRD5 Transposition

    HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.

    October 15, 2020 WebPage Regulatory News
    News

    PRA Updates Supervisory Statement on Counterparty Credit Risk

    PRA published the final policy statement PS22/20, which contains the updated supervisory statement SS12/13 on counterparty credit risk.

    October 14, 2020 WebPage Regulatory News
    News

    FSB Publishes Update on Work to Address Market Fragmentation

    FSB published an update on its work to address market fragmentation. FSB is working in this area in collaboration with the other standard-setting bodies.

    October 14, 2020 WebPage Regulatory News
    News

    EBA Proposes to Revise Guidelines on Incident Reporting Under PSD2

    EBA proposed revisions to the guidelines on major incident reporting under the second Payment Service Directive (PSD2).

    October 14, 2020 WebPage Regulatory News
    News

    EBA Finalizes Standards for Prudential Treatment of Software Assets

    EBA published the final draft regulatory technical standards specifying the methodology for prudential treatment of software assets by banks.

    October 14, 2020 WebPage Regulatory News
    News

    FSB Publishes Roadmap on Cross-Border Payments, Report on Stablecoins

    FSB published a report presenting the roadmap to enhance cross-border payments by providing a high-level plan that sets ambitious but achievable goals and milestones in the five focus areas.

    October 13, 2020 WebPage Regulatory News
    News

    EIOPA Urges Insurers to Prepare for End of Brexit Transition

    In a recent communication, EIOPA urged the insurance sector to complete its preparations for the end of the Brexit transition period on December 31, 2020.

    October 13, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5959