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 Consults on Supervisory Policy for OTC Derivatives Transactions

    HKMA is consulting on revisions to the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.

    May 25, 2020 WebPage Regulatory News
    News

    PRA on Regulatory Capital and IFRS 9 Requirements for Payment Holidays

    PRA provided further information on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address the challenges arising from COVID-19 outbreak.

    May 22, 2020 WebPage Regulatory News
    News

    HKMA on Fintech Adoption and Innovation by Banks in Hong Kong

    HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.

    May 20, 2020 WebPage Regulatory News
    News

    BIS on Impact of Increasing Use of Cloud Technology on Cyber Risk

    BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guide for Managing Climate and Environmental Risks

    ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Issues Opinion on Revisions to CRR in Response to COVID Crisis

    ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.

    May 20, 2020 WebPage Regulatory News
    News

    EBA Assesses Interlinkages Between Recovery and Resolution Planning

    EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).

    May 20, 2020 WebPage Regulatory News
    News

    SRB Publishes Final MREL Policy Under the Banking Package

    SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.

    May 20, 2020 WebPage Regulatory News
    News

    US Agencies Amend Interim Final Rule on Transition Period for CECL

    US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.

    May 19, 2020 WebPage Regulatory News
    News

    ECB Releases Results of March Survey on Credit Terms and Conditions

    ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.

    May 19, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5208