Featured Product

    US Agencies Propose Changes to Regulatory Capital and Liquidity Rules

    December 21, 2018

    US Agencies (FDIC, FED, and OCC) are proposing to establish risk-based categories for determining applicability of requirements under the regulatory capital rule, the liquidity coverage ratio (LCR) rule, and the proposed net stable funding ratio (NSFR) rule for large U.S. banking organizations. The proposal would establish four categories of standards and apply tailored capital and liquidity requirements for banking organizations subject to each category. The proposal is consistent with a separate proposal issued by FED that would apply certain prudential standards for large U.S. banking organizations based on these categories. Comments must be received by January 22, 2019.

    This proposal would not amend the capital and liquidity requirements applicable to an intermediate holding company of a foreign banking organization or its subsidiary depository institutions. It would also not amend the requirements applicable to federal branches or agencies of foreign banking organizations. The US Agencies are proposing to amend the scope of certain aspects of the regulatory capital and LCR rules; the agencies are also re-proposing the scope of NSFR rule. The proposal would update the regulatory distinction between advanced approaches and standardized approach banking organizations and further tailor the capital and liquidity requirements applicable to large banking organizations according to risk-based indicators. Among others, the proposed rule would require changes to the FFIEC 031, 041, 051, and 101 call reports, which will be addressed in a separate Federal Register notice. 

    For banking organizations with consolidated assets of USD 100 billion or more, the proposal would establish four categories of standards based on size, cross-jurisdictional activity, weighted short-term wholesale funding, off-balance sheet exposure, and non-bank assets:

    • The most stringent set of standards (Category I) would apply to U.S. global systemically important bank holding companies (G-SIBs) and their subsidiary depository institutions. The proposed standards are  consistent with the BCBS standards, subject to notice and comment rulemaking in the United States.
    • The second set of standards (Category II) would apply to banking organizations that are very large or have significant international activity. Like Category I, the agencies intend for Category II standards to be consistent with the BCBS standards, subject to notice and comment rulemaking in the United States. 
    • The third set of standards (Category III) would apply to banking organizations with consolidated assets of USD 250 billion or more that do not meet the criteria for Category I or II and to other banking organizations with consolidated assets of USD 100 billion or more, but less than USD 250 billion, that meet or exceed specified indicators of risk. Category III standards would reflect these banking organizations' heightened risk profiles relative to smaller and less complex banking organizations.
    • The fourth set of standards (Category IV) would apply to banking organizations with consolidated assets of USD 100 billion or more that do not meet the thresholds for one of the other categories. These banking organizations generally have greater scale and operational and managerial complexity relative to smaller banking organizations, but less than banking organizations that would be subject to Category I, II, or III standards. Category IV standards are less stringent than Category III standards, reflecting the lower risk profile of these banking organizations relative to other banking organizations with USD 100 billion or more in total consolidated assets. 

     

    Related Link: Federal Register Notice

    Comment Due Date: January 22, 2019

    Keywords: Americas, US, Banking, LCR, NSFR, Regulatory Capital, G-SIB, Proportionality, Reporting, US Agencies

    Featured Experts
    Related Articles
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629