Featured Product

    US Agencies Propose Leverage Ratio for Qualifying Community Banks

    November 21, 2018

    US Agencies (OCC, FED, and FDIC) proposed to simplify regulatory capital requirements for qualifying community banking organizations, as required by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCP Act). The proposal would provide regulatory burden relief to the qualifying community banking organizations by giving them an option to calculate a simple leverage ratio, rather than multiple measures of capital adequacy. The proposal will require changes to the FFIEC 031, FFIEC 041, and FFIEC 051 Call Reports, Form FFIEC 101 on risk-based capital reporting for institutions subject to the advanced capital adequacy framework, Form FR Y-9C on consolidated financial statements for holding companies, and Forms FR Y-14A and Q on capital assessments and stress testing. These forms will be addressed in one or more separate Federal Register notices. Comments on this consultation will be accepted for 60 days after publication in the Federal Register.

    Under the proposal, a community banking organization would be eligible to elect for the community bank leverage ratio framework if it has less than USD 10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a community bank leverage ratio greater than 9%. A qualifying community banking organization that has chosen the proposed framework would not be required to calculate the existing risk-based and leverage capital requirements. A firm would also be considered to have met the capital ratio requirements to be well-capitalized for the agencies' prompt corrective action rules, provided it has a community bank leverage ratio greater than 9%.

    Section 201 of the EGRRCP Act, titled “Capital Simplification for Qualifying Community Banks,” directs the agencies to develop a community bank leverage ratio of not less than 8% and not more than 10% for qualifying community banks. EGRRCP Act defines a qualifying community banking organization as a depository institution or depository institution holding company with total consolidated assets of less than USD 10 billion. In addition, the Act directs the agencies to establish procedures for the treatment of qualifying community banking organizations that fall below the community bank leverage ratio level established by the agencies. A qualifying community banking organization that exceeds the community bank leverage ratio level established by the agencies is considered to have met:

    • The generally applicable leverage and risk-based capital requirements under the agencies’ capital rule
    • The capital ratio requirements to be considered well-capitalized under the agencies’ prompt corrective action framework (in the case of insured depository institutions)
    • Any other applicable capital or leverage requirements

     

    Related Links

    Comment Due Date: FR + 60 Days

    Keywords: Americas, US, Banking, Community Banks, Leverage Ratio, EGRRCP Act, Prompt Corrective Action, Proportionality, US Agencies

    Related Articles
    News

    EC Delegated Regulation on Specialized Lending Exposures Under CRR

    EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.

    April 14, 2021 WebPage Regulatory News
    News

    OSFI Consults on Minimum Qualifying Rate for Uninsured Mortgages

    OSFI is proposing new minimum qualifying rate for uninsured mortgages under the Guideline B-20.

    April 13, 2021 WebPage Regulatory News
    News

    OSFI Issues Letter on ICAAP Submission and Internal Audit of BCAR

    OSFI issued a letter to confirm that a formal Internal Capital Adequacy Assessment Process (ICAAP) submission is not required in 2021.

    April 12, 2021 WebPage Regulatory News
    News

    ECB Updates List of Supervised Entities in EU in April 2021

    ECB updated the list of supervised entities in EU, with the number of significant supervised entities amounting to 115 as of the March 01, 2021 cut-off date.

    April 12, 2021 WebPage Regulatory News
    News

    ESMA Issues Notification Templates for STS Synthetic Securitizations

    ESMA published the interim simple, transparent, and standardized (STS) notification templates for synthetic securitizations, post the recent amendments to the Securitization Regulation.

    April 09, 2021 WebPage Regulatory News
    News

    EC Agrees to Prolong Scheme to Support NPL Reduction at Greek Banks

    EC has approved the prolongation of an existing Greek scheme aiming to support the reduction of nonperforming loans, or NPLs, of Greek banks on the basis that it remains free of any State aid.

    April 09, 2021 WebPage Regulatory News
    News

    EIOPA Study Examines Internal Model Market and Credit Risks Under SII

    EIOPA published a report presenting the results of its yearly study on the internal modeling of market and credit risks under the Solvency II Directive, also known as SII.

    April 09, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    EBA Updates Lists of Entities for Use in Capital Calculations under SA

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    FED Proposes to Automate Bank Stock Adjustment Using Call Report Data

    FED published a proposal to automate non-merger-related adjustments to member banks' subscriptions to Federal Reserve Bank capital stock.

    April 08, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6835