CMF is consulting on a regulation on implementation of additional capital requirements (Pillar 2) as a result of the supervisory review process. CMF also published a regulatory report evaluating the impact of the proposal, along with a set of frequently asked questions and a presentation on the proposal. The regulatory report in the consultation outlines the core elements of the approach that banks should take to identify their internal capital target. The consultation process will be open until July 15, 2020.
Under the interim final rule, any depository institution subsidiary of a U.S. global systemically important bank holding company or any depository institution subject to Category II or Category III capital standards may elect to temporarily exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the supplementary leverage ratio denominator. Additionally, any depository institution making this election must request approval from its primary Federal banking regulator prior to making certain capital distributions so long as the exclusion is in effect. The prior approval requirement applies to distributions to be paid beginning in the third quarter of 2020. The agencies are adopting this interim final rule to allow depository institutions that elect to opt into this treatment additional flexibility to act as financial intermediaries during this period of financial disruption. The tier 1 leverage ratio is not affected by this interim final rule.
Depository institutions subject to supplementary leverage ratio requirements report their supplementary leverage ratios in the Call Reports, Schedule RC-R, and FFIEC 101 report, Schedule A. In the near future, the agencies expect to make certain necessary revisions to the Call Reports and the FFIEC 101 report to implement the changes associated with this rule for electing depository institutions and to require such institutions to disclose the election publicly. The instructions for FR Y-9C report, Schedule HC-R, Line Item 45 (Advanced approaches holding companies only: Supplementary leverage ratio) state that respondents must report the supplementary leverage ratio from FFIEC 101 Schedule A, Table 2, Item 2.22. Therefore, revisions to the FFIEC 101 regarding how to report the supplementary leverage ratio would flow through to the FR Y-9C. Therefore, FED plans to amend the instructions for FR Y-9C as necessary. In addition, the interim final rule provides for the necessary modifications of the disclosure requirements of section 173 of the capital rule to reflect the optional temporary exclusion provided by the interim final rule.
- FED Press Release
- Interim Final Rule (PDF)
- Additional Questions (PDF)
- FDIC Financial Institution Letter
Comment Due Date: FR+ 45 Days
Effective Date: Date of Publication in FR
Keywords: Americas, US, Banking, Leverage Ratio, Supplementary Leverage Ratio, Regulatory Capital, FFIEC 101, Basel, Call Reports, FR Y-9C, Reporting, COVID-19, US Agencies
Previous ArticleMNB Issues Statement on Loan Payments After Moratorium Expires
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.