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    FED Proposes to Automate Bank Stock Adjustment Using Call Report Data

    April 08, 2021

    FED published a proposal to automate non-merger-related adjustments to member banks' subscriptions to Federal Reserve Bank capital stock. The automated process would eliminate the need for member banks to file applications to adjust their stock subscriptions—except in the context of mergers—and would significantly reduce the annual reporting burden. FED proposes that a Reserve Bank would adjust a member bank's stock subscription each time the member bank files a Call Report. The comments on this proposal must be received within 60 days after publication in the Federal Register.

    Regulation I, which governs the issuance and cancellation of capital stock by the Reserve Banks, requires that a member bank apply to adjust its stock subscription at least annually and sometimes quarterly. A member bank determines its required stock subscription based on its capital and surplus (or total deposit liabilities for a mutual savings bank) as reported in the Call Report of member bank. The Reserve Banks are developing software that will automatically pull the information needed to calculate member banks' required stock subscriptions from Call Reports and, thus, automate the stock adjustment process. In this proposed rule, FED is proposing that a Reserve Bank would adjust a member bank's stock subscription each time the member bank files a Call Report. 

    FED is also proposing to make explicit the existing Reserve Bank practice of requiring a surviving member bank apply to adjust its stock subscription before merging or consolidating with another (member or non-member) bank. These proposed amendments would ensure that the Reserve Banks make timely changes to the stock subscriptions of surviving member banks that merge or consolidate with other banks. FED is proposing two technical amendments to Regulation I, along with the conforming revisions to the FR 2056 reporting form:

    • FED is proposing amendment to specify which Reserve Banks are responsible for receiving membership applications from banks located in U.S. territories and dependencies.
    • FED is proposing amendment to state explicitly that a national bank that wants to convert into a state non-member bank must promptly file with its Reserve Bank an application for cancellation of all its Reserve Bank stock.

     

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    Comment Due Date: FR+60 Days

    Keywords: Americas, US, Banking, Call Reports, Regulation I, Reporting, Mergers and Acquisitions, FED

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