Featured Product

    US Agencies Propose Leverage Ratio for Qualifying Community Banks

    November 21, 2018

    US Agencies (OCC, FED, and FDIC) proposed to simplify regulatory capital requirements for qualifying community banking organizations, as required by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCP Act). The proposal would provide regulatory burden relief to the qualifying community banking organizations by giving them an option to calculate a simple leverage ratio, rather than multiple measures of capital adequacy. The proposal will require changes to the FFIEC 031, FFIEC 041, and FFIEC 051 Call Reports, Form FFIEC 101 on risk-based capital reporting for institutions subject to the advanced capital adequacy framework, Form FR Y-9C on consolidated financial statements for holding companies, and Forms FR Y-14A and Q on capital assessments and stress testing. These forms will be addressed in one or more separate Federal Register notices. Comments on this consultation will be accepted for 60 days after publication in the Federal Register.

    Under the proposal, a community banking organization would be eligible to elect for the community bank leverage ratio framework if it has less than USD 10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a community bank leverage ratio greater than 9%. A qualifying community banking organization that has chosen the proposed framework would not be required to calculate the existing risk-based and leverage capital requirements. A firm would also be considered to have met the capital ratio requirements to be well-capitalized for the agencies' prompt corrective action rules, provided it has a community bank leverage ratio greater than 9%.

    Section 201 of the EGRRCP Act, titled “Capital Simplification for Qualifying Community Banks,” directs the agencies to develop a community bank leverage ratio of not less than 8% and not more than 10% for qualifying community banks. EGRRCP Act defines a qualifying community banking organization as a depository institution or depository institution holding company with total consolidated assets of less than USD 10 billion. In addition, the Act directs the agencies to establish procedures for the treatment of qualifying community banking organizations that fall below the community bank leverage ratio level established by the agencies. A qualifying community banking organization that exceeds the community bank leverage ratio level established by the agencies is considered to have met:

    • The generally applicable leverage and risk-based capital requirements under the agencies’ capital rule
    • The capital ratio requirements to be considered well-capitalized under the agencies’ prompt corrective action framework (in the case of insured depository institutions)
    • Any other applicable capital or leverage requirements

     

    Related Links

    Comment Due Date: FR + 60 Days

    Keywords: Americas, US, Banking, Community Banks, Leverage Ratio, EGRRCP Act, Prompt Corrective Action, Proportionality, US Agencies

    Related Articles
    News

    MAS Amends Notice 610 on Reporting Templates for Banks in Singapore

    MAS published amendments to Notices 610 and 1003 related to submission of statistics and returns, along with the reporting templates and frequently asked questions (FAQs) associated with these Notices.

    January 24, 2020 WebPage Regulatory News
    News

    HKMA Updates Policy Module on Supervisory Review Process

    HKMA is issuing, by notice in the Gazette, revised versions of two Supervisory Policy Manual modules as statutory guidelines under section 7(3) of the Banking Ordinance. The Supervisory Policy Manual modules are CA-G-5 on “Supervisory Review Process” and SB-2 on “Leveraged Foreign Exchange Trading.”

    January 24, 2020 WebPage Regulatory News
    News

    PRA Amends Pillar 2 Capital Framework for Banks

    PRA published the policy statement PS2/20 that contains the final amendments to the Pillar 2 framework and provides feedback to responses to the consultation paper CP5/19 on updates related to Pillar 2 capital framework.

    January 23, 2020 WebPage Regulatory News
    News

    FED Proposes to Revise Information Collection Under Market Risk Rule

    FED proposed to revise and extend, for three years, FR 4201, which is the information collection under the market risk capital rule.

    January 22, 2020 WebPage Regulatory News
    News

    HKMA Consults on Stay Rules on Financial Contracts Under FIRO

    HKMA published proposals for making rules related to contractual stays on termination rights in financial contracts for authorized institutions under FIRO or the Financial Institutions (Resolution) Ordinance (Cap. 628).

    January 22, 2020 WebPage Regulatory News
    News

    MAS Amends Notices on Minimum Liquid Asset Requirements for Banks

    MAS published amendments to Notices 1015, 613, and 649 related to the minimum liquid assets (MLA) requirements.

    January 21, 2020 WebPage Regulatory News
    News

    APRA Publishes Submission on Fintech and Regtech

    APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology.

    January 21, 2020 WebPage Regulatory News
    News

    OSFI to Implement Operational Risk Capital Rules for Banks in Q1 2022

    OSFI decided to move domestic implementation of the revised Basel III operational risk capital requirements from the first quarter of 2021 to the first quarter of 2022.

    January 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guideline on Threshold for Credit Obligations Past Due

    ECB published a draft guideline, along with the frequently asked questions (FAQs), on the definition of the materiality threshold for credit obligations past due for less significant institutions.

    January 20, 2020 WebPage Regulatory News
    News

    OSFI Consults on Instruction Guide for Termination of Pension Plan

    OSFI is consulting on draft revisions to the instruction guide for termination of a defined benefit pension plan.

    January 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4526