October 22, 2018

FED proposed to extend for three years, without revision, the information collection on Basel II Interagency Pillar 2 Supervisory Guidance, also known as the Pillar 2 Guidance (FR 4199; OMB Control Number: 7100-0320). This report relates to the advanced approaches framework, which requires certain banks and bank holding companies to use an internal ratings-based approach to calculate regulatory credit risk capital requirements and advance measurement approaches to calculate regulatory operational risk capital requirements. Comments must be submitted on or before December 21, 2018.

A bank is required to comply with the advanced approaches framework if it meets either of the two independent threshold criteria: consolidated total assets of USD 250 billion or more, as reported on the most recent year-end regulatory reports; or consolidated total on-balance sheet foreign exposure of USD 10 billion or more at the most recent year-end. Furthermore, a bank holding company is required to comply with the advanced approaches framework if the holding company has either of the following:

  • Consolidated total assets (excluding assets held by an insurance underwriting subsidiary) of USD 250 billion or more, as reported on the most recent year-end regulatory reports
  • Consolidated total on-balance sheet foreign exposure of USD 10 billion or more at the most recent year-end
  • A subsidiary depository institution that meets the criteria to be subject to the advanced approaches rule or elects to adopt the advanced approaches

As of year-end 2017, 13 bank holding companies meet the above criteria and are, therefore, subject to the advanced approaches rule. Additionally, some banks or bank holding companies may voluntarily decide to adopt the advanced approaches framework. 

 

Related Link: Proposed Rule in Federal Register

Comment Due Date: December 21, 2018

Keywords: Americas, US, Banking, FR 4199, Pillar 2, Basel II, FED