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
Visuals of Federal Reserve’s 2014 CCAR and Dodd-Frank Stress Test Results (updated for company-run results)
We have prepared visuals (available here) of the 2014 Comprehensive Capital Analysis and Review (“CCAR“) and Dodd-Frank Act Stress Test (“DFAST“) results. Update: The visuals have been updated to include the company-run DFAST results.
Background on DFAST: Pursuant to its DFAST regulations, the Federal Reserve conducts annual supervisory stress tests to assess the potential impact of various hypothetical economic scenarios on the consolidated earnings, losses and regulatory capital of each U.S.… Read More
For those anxiously awaiting the oft-promised FAQ on metrics from the interagency task force on Volcker, the OCC has provided the answer. In a Dear CEO letter dated yesterday, the OCC makes it clear in the following guidance that Volcker Rule metrics recording, as many of us have been saying for some time, begins on July 1st. The relevant text of the Dear CEO letter is below. Who knew that Dear CEO letters are the new FAQs?
… Read More
“Banks with trading assets and liabilities of at least $50 billion will be required to report metrics designed to monitor their permitted trading activities.
We have prepared visuals (available here) of the Federal Reserve’s 2014 supervisory Dodd-Frank Act stress test (“DFAST“) results. Update: We have updated these visuals to reflect the company-run DFAST results and the Federal Reserve’s 2014 Comprehensive Capital Analysis and Review (“CCAR“) results.
Background: On March 20, 2014, the Federal Reserve published results of the 2014 supervisory DFAST for 30 U.S. bank holding companies with $50 billion or more in total consolidated assets (“Large BHCs“). … Read More