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

Related Articles
News

EBA Report Assesses Regulatory Framework for Fintech Activities

EBA published the findings of its analysis on the regulatory framework applicable to fintech firms when accessing the market.

July 18, 2019 WebPage Regulatory News
News

OSFI Revises Capital Requirements for Operational Risk for Banks

OSFI is revising its capital requirements for operational risk, in line with the final Basel III revisions published by BCBS in December 2017.

July 18, 2019 WebPage Regulatory News
News

OSFI Consults on Revised Principles for Management of Liquidity Risk

OSFI proposed revisions to Guideline B-6 on the principles for the management of liquidity risk.

July 18, 2019 WebPage Regulatory News
News

ESMA Guidance on Disclosures for Credit Rating Sustainability Issues

ESMA published the technical advice on sustainability considerations in the credit rating market, along with the final guidelines on disclosure requirements applicable to credit ratings.

July 18, 2019 WebPage Regulatory News
News

FASB Issues Q&A on Estimation of Expected Credit Losses by Firms

FASB issued a second question-and-answer (Q&A) document that addresses more than a dozen frequently asked questions related to the Accounting Standards Update No. 2016-13 titled “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”

July 17, 2019 WebPage Regulatory News
News

US Agencies Delay Enforcing Volcker Rule Restrictions on Foreign Funds

US Agencies (FDIC, FED, and OCC) announced that they will not take action related to restrictions under the Volcker Rule for certain foreign funds for an additional two years.

July 17, 2019 WebPage Regulatory News
News

SRB Announces SRF Receives Cash Injection, Grows to EUR 33 billion

SRB announced that the Single Resolution Fund (SRF or the Fund) received a cash injection of EUR 7.8 billion from 3,186 institutions in 2019, bringing the total amount in the Fund to about EUR 33 billion.

July 17, 2019 WebPage Regulatory News
News

FASB to Propose to Delay CECL Compliance Deadline for Certain Entities

FASB published a summary of the tentative decisions taken at its Board meeting in July 2019.

July 17, 2019 WebPage Regulatory News
News

IMF Publishes Report on 2019 Article IV Consultation with Vietnam

IMF published its staff report in context of the 2019 Article IV consultation with Vietnam.

July 16, 2019 WebPage Regulatory News
News

European Parliament Elects Next President of European Commission

European Parliament elected Ursula von der Leyen from Germany as the first female President of the next European Commission for a five-year term from November 01, 2019.

July 16, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3476