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Notice of Proposed Interagency Rulemaking on Amendments to the Regulatory Capital Rule Applicable to Large Banking Organizations and to Banking Organizations with Significant Trading Activity

Call Reports and Deposit Insurance Assessments
July 27, 2023

Summary:

The Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency jointly issued a proposal that would revise the measurement of risk-weighted assets and the definition of regulatory capital applicable to large banking organizations.  Capital requirements would not change for community banks.

Statement of Applicability: The contents of, and materials referenced in, this FIL apply to banking organizations with total assets of $100 billion or more, their subsidiary depository institutions, and other banking organizations with significant trading activity.

Highlights:

  • The proposal would replace the advanced approaches for calculating risk-weighted assets with the expanded risk-based approach.  The expanded risk-based approach would include (1) a new standardized approach for credit risk and operational risk; (2) a revised internal models-based approach and a new standardized measure for market risk; and (3) a new revised approach for CVA.
  • The expanded risk-based approach would apply to Category I, II, III, and IV banking organizations. The market risk framework would also apply to other banking organizations with $5 billion or more in trading assets plus trading liabilities or for which trading assets plus trading liabilities represent 10 percent or more of total assets.
  • The proposal would require banking organizations subject to Category III and IV standards to calculate their regulatory capital in the same manner as banking organizations subject to Category I and II standards, including the treatment of accumulated other comprehensive income, capital deductions, and rules for minority interest.
  • The proposal would apply the supplementary leverage ratio and the countercyclical capital buffer to banking organizations subject to Category IV standards.
  • The proposal includes a three-year transition period beginning July 1, 2025.  Comments on the proposal are due by November 30, 2023.
Attachment(s)
Fact Sheet
12 CR 324 Capital Adequacy of FDIC-Supervised Institutions
Related Topics
Capital Markets

Last Updated: July 27, 2023