US Agencies (FDIC, FED, and OCC) announced an interim final rule that provides temporary relief to certain community banking organizations from certain regulations and reporting requirements as a result of their growth in size due to the COVID-19 response programs such as the Paycheck Protection Program. The rule permits community banking organizations to use asset data as of December 31, 2019 to determine the applicability of various regulatory asset thresholds during calendar years 2020 and 2021. The temporary regulatory burden relief has been applied to regulations related to capital adequacy and regulatory reporting, among others. The interim final rule also summarizes the manner in which banking organizations will be required to determine the applicability of various reporting thresholds through the end of 2021 and beyond. The interim rule will be effective immediately on publication in the Federal Register while comments will be accepted for 60 days after publication in the Federal Register.
The community banking organizations include national banks, savings associations, state banks, bank holding companies, savings and loan holding companies, and U.S. branches and agencies of foreign banking organizations with under USD 10 billion in total assets as of December 31, 2019. Resulting from the participation in federal COVID-19 response programs and support measures, many community banking organizations have experienced rapid and unexpected increases in their sizes, which are generally expected to be temporary. The temporary increase in size could subject community banking organizations to new regulations or reporting requirements. In the absence of regulatory burden relief, community banking organizations that experience an increase in assets above one or more regulatory thresholds would face significant transition costs necessary to comply with new or more stringent regulatory and reporting standards. Therefore, the agencies believe it is appropriate to provide temporary regulatory burden relief to community banking organizations that have risen above, or will rise above, certain asset-based regulatory thresholds.
The relief shall promote further lending and avoid potentially temporary, but significant, transition costs that community banking organizations would otherwise face to comply with the new standards. With regard to the requirements covered by the interim final rule, community banking organizations that have crossed a relevant threshold generally will have until 2022 to either reduce their size or prepare for new regulatory and reporting standards. FED is also temporarily revising the instructions to a number of its regulatory reports to provide that community banking organizations may use asset data as of December 31, 2019 to determine reporting requirements for reports due in calendar years 2020 or 2021. The revisions to the affected reports do not affect the substantive reporting instructions for any item, schedule, or report. The regulatory burden relief applies to the following information collections:
- Financial Statements for Holding Companies (FR Y-9 Reports; OMB No. 7100-0128)
- Statements of U.S. Nonbank Subsidiaries of U.S. Holding Companies (FR Y-11 and FR Y-11S; 7100-0244)
- Reports of Foreign Banking Organizations (FR Y-7N, FR Y-7NS, and FR Y-7Q; 7100- 0125)
- Statements of Foreign Subsidiaries of U.S. Banks (FR 2314 and FR 2314S; OMB No. 7100-0073)
The agencies plan to publish a separate Federal Register notice that will address corresponding changes to the Call Reports (FFIEC 031, FFIEC 041, and FFIEC 051).
Comment Due Date: FR+60 Days
Effective Date: FR Publication Date
Keywords: Americas, US, Banking, COVID-19, Credit Risk, Regulatory Capital, Reporting, FR Y-9C, Call Reports, Paycheck Protection Program, US Agencies
Previous ArticleECB Considers Guarantee Framework for Banks Coming Out of Resolution
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.