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.
- 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.
12 CR 324 Capital Adequacy of FDIC-Supervised Institutions