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Capital and Prudential Standards Blog

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Capital and Prudential Standards Blog Relaunching in Early 2017

The Davis Polk Capital and Prudential Standards Blog is under redesign. We plan to relaunch in early 2017.

In the meantime, please visit the Financial Institutions Group Capital and Prudential Standards resource page available at this link.…  Read More

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Risk Governance: Visual Memorandum on Final Guidelines Issued by the OCC

The OCC has issued final risk governance guidelines that formalize its heightened expectations for large national banks and federal savings associations. The risk governance guidelines set new, and much higher, minimum standards for the design and implementation of a bank’s own risk governance framework and the oversight of such framework by the bank’s board of directors. The guidelines are enforceable under the OCC’s statutory authority to prescribe operational and managerial standards for national banks and federal savings associations.

State banks that are not subject to the OCC’s risk governance guidelines should still pay attention because the same or similar principles will likely be applied by the Federal Reserve and the FDIC to large state member and non-member banks.…  Read More

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Supplementary Leverage Ratio (SLR): Visual Memorandum

The U.S. banking agencies have finalized revisions to the denominator of the supplementary leverage ratio (SLR), which include a number of key changes and clarifications to their April 2014 proposal. The SLR represents the U.S. implementation of the Basel III leverage ratio. Under the U.S. banking agencies’ SLR framework, advanced approaches firms must maintain a minimum SLR of 3%, while the 8 U.S. bank holding companies that have been identified as global systemically important banks (U.S. G-SIBs) and their U.S. insured depository institution subsidiaries are subject to enhanced SLR standards.…  Read More

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U.S. Basel III Liquidity Coverage Ratio (LCR) Final Rule: Visual Memorandum

The U.S. banking agencies have issued a final rule to implement the Basel III liquidity coverage ratio (LCR) in the United States. The LCR requires large banking organizations to maintain a minimum amount of liquid assets to withstand a 30-day standardized stress scenario. The U.S. LCR final rule is more stringent than the Basel Committee’s LCR framework in several significant respects. In addition, the final rule makes a number of key changes to the proposed rule.

Davis Polk’s visual memorandum uses diagrams, flowcharts, timelines, examples and comparison tables to illustrate key aspects of the U.S.…  Read More

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Dodd-Frank Concentration Limit on Financial Institution M&A Transactions: Visual Memorandum

The Federal Reserve has issued a proposal to implement the financial sector concentration limit in Section 622 of the Dodd-Frank Act. The concentration limit generally prohibits a financial company from merging or consolidating with, acquiring all or substantially all of the assets of, or otherwise acquiring control of another company if the “liabilities” of the resulting financial company, calculated using methodologies in the proposal, exceed 10% of aggregate financial sector liabilities. We have prepared a visual memorandum (available here) that uses diagrams, formulas, tables and examples to illustrate key aspects of the Federal Reserve’s concentration limit proposal.…  Read More

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Summary and Blackline of OCC’s Proposed Revisions to National Bank and Federal Savings Association Licensing Rules

We have prepared a summary and blackline (available here) of the OCC’s proposed changes to its rules for national banks and federal savings associations relating to policies and procedures for corporate activities and transactions (“licensing rules”).

Background: The Dodd-Frank Act transferred to the OCC all functions of the former Office of Thrift Supervision (OTS) relating to federal savings associations. With a few exceptions, the OCC currently has one set of rules applicable to national banks and another set of rules applicable to federal savings associations, or, where appropriate, to all savings associations.…  Read More

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