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    US Agencies Issue Multiple Regulatory and Reporting Updates

    July 13, 2022

    The Board of Governors of the Federal Reserve System (FED) and the Federal Deposit Insurance Corporation (FDIC) announced the extension of feedback period for the U.S. global systemically important banks' (G-SIBs) 2021 resolution plans. FED also published reporting updates related to the consolidated financial statements for holding companies (FR Y-9C) and the systemic risk report (FR Y-15) as well as announced the approval of bank acquisition requests. Finally, FDIC, together with other US Agencies, issued a joint statement on customer due diligence as well as a proposed rule on deposit insurance assessment rates as well as adopted an amended restoration plan.

    Below are the key highlights of the recent updates:

    • G-SIB resolution plans feedback. FED and FDIC have extended the period for issuing feedback for the U.S. G-SIBs 2021 resolution plans to allow the agencies additional time to analyze them. Resolution plans, required by the Dodd-Frank Act, must describe the company's strategy for rapid and orderly resolution in bankruptcy in the event of material financial distress or failure of the company.
    • Reporting update on FR Y-9C. FED updated reporting form and instructions, along with supplemental instructions, for FR Y-9C. The FR Y-9C collects basic financial data from a domestic bank holding company, a savings and loan holding company, a U.S intermediate holding company and a securities holding company on a consolidated basis in the form of a balance sheet, an income statement, and detailed supporting schedules, including a schedule of off balance-sheet items. The information is used to assess and monitor the financial condition of holding company organizations, which may include parent, bank, and nonbank entities. The FR Y-9C is a primary analytical tool used to monitor financial institutions between on-site inspections.
    • Reporting update on FR Y-15. FED is requesting comments, until September 06, 2022, on a proposal to extend for three years, without revision, FR Y-15 report. The FR Y-15 quarterly report collects systemic risk data. FED uses the FR Y-15 data to monitor, on an ongoing basis, the systemic risk profile of certain financial institutions that are subject to enhanced prudential standards under section 165 of the Dodd-Frank Act. In addition, the FR Y-15 is used to facilitate the implementation of the surcharge for G-SIBs, identify other financial institutions which may present significant systemic risk, and analyze the systemic risk implications of proposed mergers and acquisitions. FED also published a supporting statement related to the proposal in FR Y-15.
    • Bank acquisition requests. FED announced its approval of the application by Bank First Corporation, Manitowoc, Wisconsin, to merge with Denmark Bancshares, Inc., and thereby indirectly acquire its subsidiary bank, Denmark State Bank, both of Denmark, Wisconsin. FED also announced its approval of the application by Benchmark Community Bank, Kenbridge, Virginia, to acquire certain assets and assume certain liabilities of First Community Bank, Bluefield, Virginia, and to establish and operate a branch in Emporia, Virginia.
    • Joint statement on customer due diligence. FDIC, FED, the Financial Crimes Enforcement Network, the National Credit Union Administration, and the Office of the Comptroller of the Currency issued a joint statement to remind banks of the risk-based approach to assessing customer relationships and conducting customer due diligence. The statement highlights that banks must apply a risk-based approach to customer due diligence, including when developing the risk profiles of their customers. Banks that operate in compliance with applicable Bank Secrecy Act/anti-money laundering (BSA/AML) legal and regulatory requirements, and effectively manage and mitigate risks related to the unique characteristics of customer relationships, are neither prohibited nor discouraged from providing banking services to customers of any specific class or type. This statement applies to all customer types referenced in the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual as well as those customer types not specifically addressed in this manual.
    • Proposal on deposit insurance assessment rates. FDIC is seeking comment, until August 20, 2022, on a proposed rule that would increase initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023. The proposal would increase the likelihood that the reserve ratio would reach the required minimum level of 1.35% by the statutory deadline of September 30, 2028. The FDIC Board also adopted an amended restoration plan, which incorporates the increase in assessment rates. The Federal Deposit Insurance Act (FDI Act) requires that the FDIC Board adopt a restoration plan when the Deposit Insurance Fund reserve ratio falls below the minimum of 1.35% or is expected to within six months. The Amended Restoration Plan and proposed increase in assessment rates intend to increase the likelihood that the reserve ratio will reach the statutory minimum of 1.35% by September 30, 2028, as required by statute. The proposed increase in assessment rates would also support growth in the Deposit Insurance Fund in progressing toward the FDIC’s long-term goal of a 2% Designated Reserve Ratio.


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    Keywords: Americas, US, Banking, Reporting, FR Y 9C, FR Y 15, G-SIBs, Resolution Plan, Systemic Risk, Basel, Bank Consolidation, Deposit Insurance, Customer Due Diligence, Governance, Regulatory Capital, FED, FDIC, US Agencies

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