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Financial Institution Letter
Regulatory Capital Standards Deduction of Goodwill Net of Associated Deferred Tax Liability
Summary: The federal banking agencies are jointly issuing the attached final rule allowing goodwill, which must be deducted from Tier 1 capital, to be reduced by the amount of any associated deferred tax liability. The final rule will take effect 30 days after its publication in the Federal Register . However, a bank may elect to apply this final rule for regulatory capital reporting purposes as of December 31, 2008.

FDIC-Supervised Banks (Commercial and Savings)


  • 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.

  • Under the attached final rule, the agencies are extending 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 agencies decided not to extend similar treatment to other intangible assets currently required to be deducted fully from Tier 1 capital.

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

FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at .

To receive FILs electronically, please visit .

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
Last Updated: December 16, 2008