Establishing a top-tier U.S. intermediate holding company (IHC) that complies with Dodd-Frank enhanced prudential standards involves complex structuring, regulatory, capital, liquidity, tax and corporate governance considerations as well as significant business, legal and operational analysis. We have prepared a visual memorandum (available here) that uses flowcharts, diagrams, comparison tables and timelines to explore key structuring and regulatory considerations for foreign banks that are required to establish an IHC.
Dodd-Frank Enhanced Prudential Standards for Foreign Banks with Limited U.S. Footprints: Visual Memorandum
The Federal Reserve’s Dodd-Frank enhanced prudential standards (EPS) final rule adopts a tiered approach for applying EPS to foreign banks. Under the tiered approach, the most burdensome requirements will only apply to foreign banks with large U.S. operations, whereas fewer requirements will apply to foreign banks with limited U.S. footprints. We have prepared a visual memorandum focusing on the requirements that will apply to foreign banks with limited U.S. footprints, including the U.S. risk committee, internal liquidity stress testing, home country capital certification and home country capital stress testing requirements.… Read More
The Federal Reserve’s Dodd-Frank enhanced prudential standards final rule requires a foreign banking organization with $50 billion or more in U.S. assets to maintain separate U.S. liquidity buffers for its U.S. branches/agencies and U.S. intermediate holding company. We have prepared a visual memorandum that uses diagrams, flowcharts, examples and an interactive calculator to illustrate the U.S. liquidity buffer requirement and related calculations. The interactive calculator allows you to enter various internal and external cash flow amounts to assess the potential impact of the final rule’s prescribed method for calculating net stressed cash flow need.… Read More
We have prepared two visual summaries of the Federal Reserve’s Dodd-Frank enhanced prudential standards final rule. One visual summary focuses on requirements that apply to U.S. bank holding companies (BHCs) and the other focuses on requirements that apply to foreign banks, including the U.S. intermediate holding company (IHC) requirement.
Today, the Federal Reserve published a final rule establishing Dodd-Frank enhanced prudential standards for U.S. bank holding companies with ≥$50 billion in total consolidated assets (Large U.S. BHCs) and foreign banking organizations with ≥$50 billion in total consolidated assets (Large FBOs).
By way of background, Section 165 of the Dodd-Frank Act requires the Federal Reserve to establish enhanced prudential standards, including heightened capital standards, liquidity standards, single counterparty credit limits, enhanced risk management requirements, capital stress testing requirements (final rules already issued) and an early remediation framework, for Large U.S.… Read More
Ahead of next week’s Dodd-Frank enhanced prudential standards (EPS) final rule, we have created an EPS resources website: USBasel3.com/EPS. The website contains background materials and Davis Polk’s analysis and visuals on EPS proposals for large domestic and foreign banking organizations, U.S. Basel III, stress testing, liquidity, risk governance, counterparty credit exposures and other prudential regulatory developments.
Over the coming weeks, we will be preparing a series of materials relating to the EPS final rule, including high-level overviews, blacklines, comparisons, memos and visuals. … Read More