Today, the U.S. banking agencies issued a final rule regarding the denominator of the Basel III supplementary leverage ratio (SLR). We have prepared a blackline that compares the text of the final rule against the proposed rule that was issued in April 2014.
Today, the Federal Reserve issued a proposal to revise certain aspects of its capital planning and stress testing regulations. We have prepared a blackline (available here) showing these proposed changes.
Key changes: The proposal would, among other things:
- Shift the start date of the capital plan and stress test cycles from October 1 of a calendar year to January 1 of the following calendar year. A large (≥$50 billion) bank holding company (“BHC“) would be required to submit its capital plan and stress test results to the Federal Reserve by April 5, three months later than under current regulations.
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
Federal Reserve Governor Tarullo Discusses Removal of Internal Ratings-Based (IRB) Approach to Regulatory Capital
Today, Federal Reserve Governor Daniel K. Tarullo delivered a speech that, among other things, argued for discarding the advanced internal ratings-based (IRB) approach for calculating risk-based capital requirements. Currently, under U.S. Basel III, the advanced IRB approach applies to U.S. banking organizations with at least $250 billion in total consolidated assets or at least $10 billion in on-balance-sheet foreign exposures. Governor Tarullo also argued for increasing the $50 billion applicability threshold for Dodd-Frank enhanced prudential standards to a higher asset level, such as $100 billion. … Read More
[A PDF version of the comparison chart is available here (mobile and printer friendly)] We have prepared a chart that compares the U.S. banking agencies’ proposed revisions to the U.S. Basel III Supplementary Leverage Ratio (“SLR”) with the Basel Committee’s January 2014 revisions to the Basel III leverage ratio. While the revised SLR proposed by the U.S. banking agencies is similar to the revised Basel III leverage ratio in many respects, there are some important differences between the two ratios.… Read More