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.
The Federal Reserve has scheduled an open meeting for Tuesday, April 8, 2014, at 4:00 p.m., to vote on the following capital-related rulemakings:
1. A draft interagency final rule implementing enhanced supplementary leverage ratio (SLR) standards for large, interconnected U.S. banking organizations.
- Davis Polk’s memorandum on the U.S. banking agecies’s July 2013 proposed enhanced SLR standards for U.S. G-SIBs is available here.
2. An interagency notice of proposed rulemaking that would modify the definition of total leverage exposure (the denominator of the supplementary leverage ratio) and the calculation of the ratio in the agencies’ 2013 revised capital rule.… Read More
Overview of Basel Committee’s Standardized Approach for Measuring Derivatives Exposure (SA-CCR, formerly known as NIMM)
The Basel Committee has finalized a standardized, non-internal-model-based method for calculating counterparty credit risk exposures associated with OTC derivatives, exchange-traded derivatives, and long settlement transactions. This blog post provides a high-level overview of the new standardized approach (SA-CCR), which replaces both the Current Exposure Method (CEM) and the Standardised Method (SM) in the Basel capital framework. In addition, the IMM shortcut method will be eliminated from the Basel capital framework once the SA-CCR takes effect, which is scheduled for January 1, 2017. … Read More
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.