Featured Product

    US Agencies Issue Several Regulatory and Reporting Updates

    January 04, 2023

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act, extended the comment period for rule on large bank resolvability, published results of 2021 resolution plans of several domestic and foreign banks, announced the 2023 asset-size thresholds under the Community Reinvestment Act (CRA) regulations, updated reporting forms and instructions for systemic risk report (FR Y-15) and capital assessments and stress testing report (FR Y-14A), updated the reporting instructions and supplemental instructions for FR Y-9C, updated the supplemental instructions for Call Reports (FFIEC 051, FFIEC 041, and the FFIEC 031), and approved certain bank acquisition requests. Additionally, the Office of the Comptroller of the Currency (OCC) published reports on key risks facing the federal banking system and performance of first-lien mortgages in the third quarter of 2022, while the Acting Comptroller of the Currency, Michael J. Hsu, discussed progress on regulatory priorities for guarding against complacency by banks, reducing inequality in banking, adapting to digitalization, and managing climate-related financial risks.

    Below are the key highlights of these recent updates:

    • Final Rule on LIBOR Act. FED adopted the final rule that implements the Adjustable Interest Rate (LIBOR) Act by identifying benchmark rates based on Secured Overnight Financing Rate (SOFR), which is slated to replace LIBOR in certain financial contracts after June 30, 2023. The final rule identifies the replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act. Consistent with the LIBOR Act, the final rule ensures that LIBOR contracts adopting a benchmark rate selected by FED will not be interrupted or terminated following the LIBOR replacement. The final rule will be effective 30 days after its publication in the Federal Register.
    • Extension of Rule on Large Bank Resolvability. FED and the Federal Deposit Insurance Corporation (FDIC) extended, until January 23, 2023, the comment period on an advance notice of proposed rulemaking to enhance ability of regulators to resolve large banks in an orderly way, should they fail. The agencies seek comments on several potential new requirements and resources that could be used for an orderly resolution of large banking organizations, including a long-term debt requirement.
    • Results of Resolution Plans. FED and FDIC announced results of their joint review of the resolution plans for 71 domestic and foreign banking organizations. The results show that the agencies identified two deficiencies in the 2021 plan submission of Credit Suisse AG, which pertain to resolution planning cash flow forecasting capabilities and governance for the U.S. operations. The firm has been asked to resubmit a revised resolution plan for its U.S. operations, by May 31, 2023, to address governance issues and, by July 2024, to remediate the cash flow forecasting weaknesses. The agencies also identified a shortcoming in 2021 plan submission of BNP Paribas that relates to the continuity in resolution of the bank securities repurchase agreement activity for the U.S. operations. In addition, FDIC released the public sections of resolution plans of 21 large insured depository institutions due by December 1, 2022.
    • Update on asset-size thresholds. FED and FDIC as well as announced the 2023 updated asset-size thresholds used to define "small bank" and "intermediate small bank" under the CRA regulations. The agencies made adjustments to asset-size thresholds based on the average change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and changed the definitions of small and intermediate small banks. A small bank has been defined as an institution with assets of less than USD 1.503 billion while an intermediate small bank has been defined as a small institution with assets of at least USD 376 million and less than USD 1.503 billion as of December 31 of either of the prior two calendar years; these asset-size thresholds will come into effect from January 01, 2023.
    • Bank acquisition requests. FED approved the application of Farmers National Banc Corp, Ohio to acquire Emclaire Financial Corp and thus indirectly acquire The Farmers National Bank of Emlenton, both from Pennsylvania. Additionally, FED approved the application by Brookline Bancorp Inc from Boston, Massachusetts, to merge with PCSB Financial Corporation and thus indirectly acquire PCSB Bank, both of Yorktown Heights, New York. Finally, FED also approved the application by United Community Banks, Inc in South Carolina to merge with Progress Financial Corporation and thus indirectly acquire Progress Bank and Trust, both from Huntsville, Alabama.
    • Semiannual Risk Perspective Report. The OCC-published report covers risks facing national banks, federal savings associations, and federal branches and agencies based on data as of June 30, 2022. The report highlights that operational and compliance risks remain elevated, as cyber threats continue to evolve and banks continue to operate in an increasingly complex environment that includes significant regulatory changes. The report found that quantity of credit risk in commercial and retail loan portfolios remains moderate. Loan portfolio performance has been resilient, but signs of potential weakening in some segments warrant careful monitoring. The report also discusses issues related to the climate-related financial risks and the emerging risks related to crypto-assets.
    • Mortgage Metrics Report. The report presents performance data for the third quarter of 2022 for loans that the reporting banks own or service for others as a fee-based business. The results show that overall mortgage performance this quarter improved from the third quarter of 2021. As of September 30, 2022, the reporting banks serviced approximately 12 million first-lien residential mortgage loans with USD 2.7 trillion in unpaid principal balances. Servicers initiated 9,835 new foreclosures in the third quarter of 2022, a decrease from the prior quarter, but a higher volume than a year earlier. The new foreclosure volume in the third quarter of 2022 is lower than pre-COVID-19 pandemic foreclosure volumes.


    Related Links


    Keywords: Americas, US, Banking, Libor, Benchmark Reforms, Reporting, Lending, Resolution Plans, Basel, Stress Testing, Fr Y 14A, Fr Y 9, Fr Y 15, Systemic Risk Report, FED, FDIC, OCC

    Featured Experts
    Related Articles

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8952