Capital adequacy

Under current international capital standards issued by the Basel Committee of the Bank for International Settlements, certain large banking organizations, with regulatory approval, can use their sophisticated internal risk-based models to determine the risk weight of their assets, called the Internal Ratings-Based Approach. The remaining banking organizations use the Standardized Approach. The standardized risk-based capital…

On December 1, 2015, the Federal Reserve Board published in the Federal Register a proposed rule to require all depository institution holding companies to publicly disclose on a quarterly basis certain information about their liquidity coverage ratios. In September 2014, the US banking regulators had finalized the liquidity coverage ratio rule, which requires that…

Recently, the Federal Reserve Board proposed new regulations, based on recommendations from international regulators, to require global systemically important US banks, and such non-US banks with US operations, to maintain a “total loss-absorbing capacity” ratio that would be satisfied by maintaining additional capital and issuing certain types of unsecured long term debt.

Kathleen A. Scott…

On November 6, 2015, US banking regulators (the Office of Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve Board) issued instructions (“Instructions”) for banking entities on making regulatory capital adjustments for their investments in covered funds subject to the Volcker Rule. Both the Volcker Rule and the agencies’ risk-based regulatory…

The Financial Industry Regulatory Authority (“FINRA”) has issued Regulatory Notice 15-33, which provides guidance on prudent practices that broker-dealers should consider and implement in order to effectively manage liquidity.  In its notice, FINRA stressed that failure to manage liquidity has contributed to firm failures as well as wide spread systemic crises.

The notice described …

On July 20, 2015, the Federal Reserve Board issued a final rule imposing an additional capital surcharge on the largest US bank holding companies. This additional capital surcharge would be in addition to the capital conservation buffer already required under existing bank holding company capital requirements, and would be applicable to those bank holding companies…

In September 2014, the US federal banking regulators finalized the Liquidity Coverage Ratio (LCR) rules. On May 28, 2015, the Federal Reserve Board published proposed rules to allow additional liquid assets to be used to meet the ratio. Comments will be accepted on the proposed rule through July 24, 2015.

The LCR requires that certain…

On April 9, 2015, the Federal Reserve Board announced that it was broadening the applicability of its policy on the formation and expansion of small bank holding companies from $500 million in total consolidated assets to $1 billion, and extending the policy to savings and loan holding companies. The amendments to the policy are…

Banking organizations are subject to complex risk-based regulatory capital rules. Some banking organizations may use internal risk management models approved by the relevant regulator; other must use standardized rules set out in the regulations. On April 6, 2015, Frequently Asked Questions were released by the federal banking regulators to assist banking organizations in calculating their…

The Basel Committee of the Bank for International Settlements, a group of the world’s banking regulators, develops international banking standards.  The Basel  Committee again is considering revising the current international risk-based capital requirements.

Kathleen A. Scott wrote a recent column in the New York Law Journal that discusses the Basel Committee review process and the…