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OCC Bulletin 2019-52
November 1, 2019
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Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) published a final rule in the Federal Register on November 1, 2019, that revises the framework for determining the applicability of regulatory capital and standardized liquidity requirements for large U.S. banking organizations, the U.S. intermediate holding companies (IHC) of certain foreign banking organizations, and certain of their depository institution subsidiaries.
The final rule is effective as of December 31, 2019.
This final rule does not apply to community banks.
Many of the agencies’ current rules, including the capital rule, the LCR rule, and the proposed net stable funding ratio (NSFR) rule, differentiate among banking organizations based on one or more risk indicators, such as total asset size and foreign exposure.
The capital rule categorizes banking organizations into two groups: (i) banking organizations subject solely to the standardized approach, which have total consolidated assets of less than $250 billion and total on-balance-sheet foreign exposure of less than $10 billion (standardized approach banking organizations), and (ii) advanced approaches banking organizations, which are generally banking organizations with $250 billion or more in total consolidated assets or $10 billion or more in total on-balance-sheet foreign exposure, together with depository institution subsidiaries of banking organizations meeting those thresholds (advanced approaches banking organizations). Standardized approach banking organizations must calculate risk-weighted assets using the relatively simple standardized approach and must calculate a leverage ratio that measures regulatory capital relative to on-balance-sheet assets. Advanced approaches banking organizations must use the standardized approach to determine their risk-based capital ratios but are also subject to additional requirements, including the requirement to calculate a supplementary leverage ratio, which measures regulatory capital relative to on-balance-sheet and certain off-balance-sheet exposures.
The LCR rule currently distinguishes between banking organizations based on total asset size and foreign exposure. The full LCR requirement generally applies to advanced approaches banking organizations and to their depository institution subsidiaries with total consolidated assets equal to $10 billion or more. The proposed NSFR requirement would apply to the same banking organizations as the current LCR requirement.
Please contact Mark Ginsberg, Senior Risk Expert, or Venus Fan, Risk Expert, Capital Policy Division, at (202) 649-6370; James Weinberger, Technical Expert, Treasury and Market Risk, at (202) 649-6360; or Carl Kaminski, Special Counsel, Henry Barkhausen, Counsel, or Daniel Perez, Senior Attorney, Chief Counsel’s Office, at (202) 649-5490.
Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel