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Home Archive for category "Final Rules" (Page 5)
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Davis Polk Blackline of Basel Committee’s Revisions to Basel III Leverage Ratio

[Detailed client memorandum to come.] We have prepared a blackline that compares the Basel Committee’s January 2014 final revisions to the Basel III leverage ratio to the June 2013 proposed revisions.  We will be publishing a client memorandum that discusses the key changes to the Basel III leverage ratio.

Background:  Today, the Basel Committee issued final revisions to the Basel III leverage ratio framework and disclosure requirements following endorsement by its governing body, the Group of Governors and Heads of Supervision (GHOS).…  Read More

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Basel Committee Issues Final Capital Standards for Equity Investments in Funds

Today, the Basel Committee finalized its revised risk-based capital framework for a bank’s equity investments in funds, which was proposed in July 2013.  The revised framework includes three approaches for calculating risk-based capital requirements for equity investments in funds (hierarchy of approaches), which are in decreasing order of risk-sensitivity.

Scope of Application:  The revised framework is applicable to banks’ equity investments in all types of funds that are held in their banking book, including off-balance sheet exposures (e.g., unfunded commitments to subscribe to a fund’s future capital calls).  …  Read More

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Federal Reserve Makes Technical Revisions to Market Risk Capital Rule and U.S. Basel III

Today, the Federal Reserve issued a final rule that makes technical changes to the market risk capital rule to align it with the U.S. Basel III capital framework adopted by the Federal Reserve earlier this year.

The market risk capital rule is used by banking organizations with significant trading activities to calculate regulatory capital requirements for market risk.  The technical changes to the rule reflect modifications by the Organization for Economic Cooperation and Development regarding country risk classifications.  The revisions also clarify the criteria for determining whether underlying assets are delinquent for certain securitization positions in the trading book.  …  Read More

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Davis Polk Blackline Comparing Federal Reserve’s Final and Proposed Policy Statements on Stress Test Scenario Design

Today, the Federal Reserve issued a final policy statement describing the processes it will use to develop scenarios for future capital planning and stress testing exercises.  The policy statement will be used to develop supervisory scenarios for both annual supervisory and company-run stress tests.  It describes the characteristics of the stress test scenarios and explains the procedures for formulating the scenarios.

The Federal Reserve noted that the macroeconomic scenarios released last week for the 2014 stress testing exercise are consistent with the final policy statement.…  Read More

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Davis Polk’s U.S. Basel III Guide for Community Banks

U.S. Basel III is the most complete overhaul of U.S. bank capital standards in nearly a quarter of a century. It comprehensively revises the regulatory capital framework for the entire U.S. banking sector and will have significant implications for community banks from a business, operations, M&A and regulatory compliance perspective. This article provides an overview of the key aspects of U.S. Basel III for community banks.  A version of this article was published in DirectorCorps, Bank Director’s educational program for directors of community banks.…  Read More

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Revised Tier 2 Eligibility Guidance in Federal Register Version of U.S. Basel III Final Rule

Today, the Federal Reserve’s and OCC’s U.S. Basel III final rule was published in the Federal Register.  There are a number of substantive, technical and stylistic differences between the Federal Register version and the July 2013 draft version of the U.S. Basel III final rule.  Among other things, the Federal Reserve and OCC clarified in the preamble to the Federal Register version that “subordinated debt instruments that qualify as tier 2 capital must be subordinated to general creditors, which generally means senior indebtedness, excluding trade creditors.” (emphasis added).…  Read More

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