FDIC Seeks Comments on Proposed Rulemaking for Assessment System
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Assessments
A Proposed Rule by the
Publication Date:
Agency:
Dates: Comments must be received on or before
Comments Close:
Entry Type: Proposed Rule
Action: Notice of proposed rulemaking and request for comment.
Document Citation: 79 FR 42698
Page: 42698 -42707 (10 pages)
CFR: 12 CFR 327
RIN: 3064-AE16
Document Number: 2014-16963
Shorter URL: https://federalregister.gov/a/2014-16963
Action
Notice Of Proposed Rulemaking And Request For Comment.
Summary
The
DATES:
Comments must be received on or before
ADDRESSES:
You may submit comments, identified by RIN number, by any of the following methods:
Agency Web site: http://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the Agency Web site.
Email: [email protected]. Include RIN number in the subject line of the message.
Mail:
Hand Delivery/Courier: Guard station at the rear of the 550 17th
Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
Public Inspection: All comments received will be posted without change to http://www.fdic.gov/regulations/laws/federal including any personal information provided. Additionally, you may send a copy of your comments to: By mail to the U.S. OMB,
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Ratios and Ratio Thresholds Relating to Capital Evaluations
A. Background
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)1 required that the
Table 1--Capital Ratios Used To Determine Capital Evaluations for Assessment Purposes
Capital evaluations .....Total risk-based ratio (percent) .....Tier 1 risk-based ratio (percent) .....Tier 1 leverage ratio (percent)
Well Capitalized .....10 .....6 .....5
Adequately Capitalized * .....8 .....4 .....4
Undercapitalized .....Does not qualify as either Well Capitalized or Adequately Capitalized.
* An institution is Adequately Capitalized if it is not Well Capitalized, but satisfies each of the listed capital ratio standards for Adequaltely Capitalized.
In 2007, the nine risk classifications were consolidated into four risk categories, which continued to be based on capital evaluations and supervisory ratings; [4] the capital ratios and the thresholds used to determine capital evaluations remained unchanged. [5]
In 2011, the
The assessment system for small banks, generally those with less than
On
The Basel III capital rules also adopt changes to the regulatory capital requirements for banking organizations consistent with section 171 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), often referred to as the "Collins Amendment." Under section 171 of the Dodd-Frank Act, the generally applicable capital requirements serve as a risk-based capital floor for banking organizations subject to the advanced approaches risk-based capital rules [12] (advanced approaches banks [13] ). Under the Basel III capital rules effective
All banks, including advanced approaches banks, must calculate risk-weighted assets under the standardized approach and report these risk-weighted assets, for capital purposes, in Schedule RC-R of the Call Report effective
For advanced approaches banks, the Basel III capital rules also introduce the supplementary leverage ratio and a threshold for that ratio that advanced approaches banks must meet to be deemed adequately capitalized. [19] (The supplementary leverage ratio as adopted in the Basel III capital rules does not, however, establish a ratio that advanced approaches banks must meet to be deemed well capitalized.) While all advanced approaches banks must calculate and begin reporting the supplementary leverage ratio beginning in the first quarter of 2015, the supplementary leverage ratio does not become effective for PCA purposes until
On
The
Specifically, the
Effective
1. An institution will be well capitalized if it satisfies each of the following capital ratio standards: Total risk-based capital ratio, 10.0 percent or greater; tier 1 risk-based capital ratio, 8.0 percent or greater (as opposed to the current 6.0 percent or greater); leverage ratio, 5.0 percent or greater; and common equity tier 1 capital ratio, 6.5 percent or greater.
2. An institution will be adequately capitalized if it is not well capitalized but satisfies each of the following capital ratio standards: Total risk-based capital ratio, 8.0 percent or greater; tier 1 risk-based capital ratio, 6.0 percent or greater (as opposed to the current 4.0 percent or greater); leverage ratio, 4.0 percent or greater; and common equity tier 1 capital ratio, 4.5 percent or greater.
The definition of an undercapitalized institution remains the same: An institution will be undercapitalized if it does not qualify as either well capitalized or adequately capitalized.
The
Table 2 summarizes the proposed ratios and ratio thresholds for determining capital evaluations for deposit insurance assessment purposes, to be effective
Table 2--Proposed Capital Ratios Used To Determine Capital Evaluations for Assessment Purposes, Effective
Capital evaluations .....Total risk-based capital ratio (percent) .....Tier 1 risk-based capital ratio (percent) .....Common equity tier 1 capital ratio (percent) .....Leverage ratio (percent)
Well Capitalized .....10 .....8 .....6.5 .....5
Adequately Capitalized * .....8 .....6 .....4.5 .....4
Undercapitalized .....Does not qualify as either Well Capitalized or Adequately Capitalized.
* An institution is Adequately Capitalized if it is not Well Capitalized, but satisfies each of the listed capital ratio standards for Adequately Capitalized.
Effective
Table 3 summarizes the proposed ratios and ratio thresholds for determining capital evaluations for deposit insurance assessment purposes, to be effective
Table 3--Proposed Capital Ratios Used To Determine Capital Evaluations for Assessment Purposes, Effective
Capital evaluations .....Total risk-based capital ratio (percent) .....Tier 1 risk-based capital ratio (percent) .....Common equity tier 1 capital ratio (percent) .....Leverage ratio (percent) .....Supplementary leverage ratio (advanced approaches banking organizations) .....Supplementary leverage ratio (subsidiary IDIs of covered BHCs) (percent)
Well Capitalized .....10 .....8 .....6.5 .....5 .....Not applicable .....6
Adequately Capitalized * .....8 .....6 .....4.5 .....4 .....3 .....3
Undercapitalized .....Does not qualify as either Well Capitalized or Adequately Capitalized.
* An institution is Adequately Capitalized if it is not Well Capitalized, but satisfies each of the listed capital ratio standards for Adequately Capitalized.
C. Alternatives
Given the information available, the
[*Federal RegisterVJ 2014-07-23]
For more information about
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