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

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Technical Package on Reporting Framework 3.0

    EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.

    January 14, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets

    APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Publishes Risk Dashboard for Third Quarter of 2020

    EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro

    ECB concluded the public consultation on the introduction of a digital euro in EU.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Finalizes Guide on Supervisory Approach to Bank Consolidation

    ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.

    January 12, 2021 WebPage Regulatory News
    News

    SRB Chair Outlines Work Priorities for 2021

    The SRB Chair Elke König published an article setting out work priorities for 2021.

    January 11, 2021 WebPage Regulatory News
    News

    FDIC Selects Companies to Compete in Final Phase of Tech Sprint

    FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.

    January 11, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6417