Featured Product

    US Agencies Announce Changes to CBLR Framework in Light of COVID-19

    April 23, 2020

    US Agencies (FDIC, FED, and OCC) issued two interim final rules that make changes to the community bank leverage ratio (CBLR) framework and implement Section 4012 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The two rules will modify the CBLR framework so that beginning in the second quarter 2020 and until the end of the year, a banking organization that has a leverage ratio of 8% or greater and meets certain other criteria may elect to use CBLR framework. Also, community banking organizations will have until January 01, 2022, before the CBLR requirement is re-established at greater than 9%. The changes in the rule will impact the FR Y-9C report for banks. The effective date for these interim final rules is April 23, 2020 while the comment period for these rules ends on June 08, 2020.

    The interim final rule on temporary changes to CBLR framework makes temporary changes to the CBLR framework, pursuant to section 4012 of CARES Act. As of the second quarter 2020, a banking organization with a leverage ratio of 8% or greater (and that meets other qualifying criteria) may elect to use CBLR framework. The statutory interim final rule also establishes a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls below the 8% CBLR requirement, so long as the banking organization maintains a leverage ratio of 7% or greater. The temporary changes to the CBLR framework that are implemented by this statutory interim final rule will cease to be effective as of the earlier of the termination date of the national emergency concerning COVID-19 declared by the President on March 13, 2020, under the National Emergencies Act, or December 31, 2020. To provide clarity to banking organizations, the agencies concurrently issued an interim final rule that provides a transition from the temporary 8% CBLR requirement to a 9% CBLR requirement.

    The interim final rule on transition for CBLR Framework provides a graduated transition to a CBLR requirement of 9% from the temporary 8% CBLR requirement. When the requirements in the transition interim final rule become applicable, the CBLR will be 8% beginning in the second quarter of calendar year 2020, 8.5% through calendar year 2021, and 9% thereafter. The transition interim final rule also maintains a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls no more than 1 percentage point below the applicable CBLR requirement. The agencies are providing community banking organizations with a clear and gradual transition back to the 9% leverage ratio requirement previously established by the agencies. This transition will allow community banking organizations to focus on supporting lending to creditworthy households and businesses, given the recent strains on the U.S. economy due to the C0VID-19 outbreak. FED has temporarily revised the instructions to the FR Y-9C report to accurately reflect the transition provision as modified by the statutory interim final rule and the transition interim final rule.

     

    Related Links

    Comment Due Date: June 08, 2020

    Effective Date: April 23, 2020

    Keywords: Americas, US, Banking, CBLR Framework, COVID-19, CARES Act, Leverage Ratio, Credit Risk, Community Banks, Basel III, US Agencies

    Featured Experts
    Related Articles
    News

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    News

    HM Treasury Announces G7 Agreement on Green Agenda Ahead of COP26

    HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6821