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Financial Institution Letter
Regulatory Capital Standards Proposed Deduction of Goodwill Net of Associated Deferred Tax Liability
September 30, 2008
Notes
 
Summary: The federal banking agencies have jointly issued the attached Notice of Proposed Rulemaking (NPR) seeking comment on whether to allow goodwill, which must be deducted from Tier 1 capital, to be reduced by the amount of any associated deferred tax liability. The FDIC will accept comments on the NPR through October 30, 2008.

Highlights:

  • Under the agencies' existing regulatory capital rules, certain assets that must be deducted from Tier 1 capital may be reduced by any deferred tax liability specifically related to the asset.
  • In the attached NPR, the agencies propose to extend this treatment to goodwill acquired in a taxable business combination, thereby allowing a bank, bank holding company, or savings association to make the required deduction of goodwill from Tier 1 capital net of any associated deferred tax liability.
  • The NPR also requests comment on whether there are other intangible assets currently required to be fully deducted from Tier 1 capital for which the agencies should consider a similar treatment.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2008/index.html .

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html .

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703- 562-2200).



Additional Related Topics:

  • Risk-Based Capital Standards
  • 12 CFR Part 325
FIL-100-2008
Attachments
Notice of Proposed Rulemaking, Minimum Capital Ratios; Capital Adequacy Guidelines; Capital Maintenance; Capital: Deduction of Goodwill Net of Associated Deferred Tax Liability
Last Updated: September 30, 2008