During the recent sustained low interest rate environment, the banking industry’s asset mix and funding profile have shifted. This article looks at how these changes appear to have resulted in increased interest-rate risk (IRR) exposure. The article also highlights supervisory expectations for IRR management and suggests strategies financial institutions can use to assess and mitigate this exposure.
Completed by FDIC examiners at the conclusion of each risk management examination, the Credit and Consumer Products/Services Survey gathers examiner insights on underwriting practices, new and evolving banking activities and products, commercial real estate market conditions, and funding practices. This article shares recent Survey results with a focus on lending activity including trends in underwriting, factors influencing banks’ ability and willingness to lend, use of loan workouts, and loan growth trends across the country.
The New Basel III Definition of Capital: Understanding the Deductions for Investments in Unconsolidated Financial Institutions
The new regulatory capital rules require a deduction from capital, under certain circumstances, for a portion of a bank’s investments in the capital of unconsolidated financial institutions. This article, which is part of the FDIC’s ongoing efforts to assist banks in understanding the new rule, provides examples that show the mechanics of the calculation.
This feature provides an overview of recently released regulations and supervisory guidance.
Supervisory Insights is published by the Division of Risk Management Supervision of the Federal Deposit Insurance Corporation to promote sound principles and practices for bank supervision.
Martin J. Gruenberg
Doreen R. Eberley
Director, Division of Risk Management Supervision
Journal Executive Board
Division of Risk Management
George E. French, Deputy Director and Executive Editor
James C. Watkins, Senior Deputy Director
Robert L. Burns, Deputy Director
Melinda West, Deputy Director
Division of Depositor and Consumer
Sylvia H. Plunkett, Senior Deputy Director
Jonathan N. Miller, Deputy Director
Thomas J. Dujenski, Atlanta Region
Kristie K. Elmquist, Dallas Region
Stan R. Ivie, San Francisco Region
James D. LaPierre, Kansas City Region
M. Anthony Lowe, Chicago Region
John F. Vogel, New York Region
Kim E. Lowry
Daniel P. Bergman
Jeffrey A. Fahrmann
Supervisory Insights is available online by visiting the FDIC’s website at www.fdic.gov. To provide comments or suggestions for future articles, to request permission to reprint individual articles, or to request print copies, send an e-mail to SupervisoryJournal@fdic.gov.
The views expressed in Supervisory Insights are those of the authors and do not necessarily reflect official positions of the Federal Deposit Insurance Corporation. In particular, articles should not be construed as definitive regulatory or supervisory guidance. Some of the information used in the preparation of this publication was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the Federal Deposit Insurance Corporation.