66024 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Parts 3 and 50 

[Docket ID OCC–2018–0037] 

RIN 1557–AE56 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 217 and 249 

[Docket No. R–1628] 

RIN 7100–AF21 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 324 and 329 

RIN 3064–AE96 

Proposed Changes to Applicability 

Thresholds for Regulatory Capital and 

Liquidity Requirements 

AGENCY: Office of the Comptroller of the 

Currency, Treasury; the Board of 

Governors of the Federal Reserve 

System; and the Federal Deposit 

Insurance Corporation. 

ACTION: Notice of proposed rulemaking 

with request for public comment. 

SUMMARY: 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) are inviting 

comment on a proposal that would 

establish risk-based categories for 

determining applicability of 

requirements under the regulatory 

capital rule, the liquidity coverage ratio 

rule, and the proposed net stable 

funding ratio rule for large U.S. banking 

organizations. The proposal would 

establish four categories of standards 

and apply tailored capital and liquidity 

requirements for banking organizations 

subject to each category. The proposal is 

consistent with a separate proposal 

issued by the Board that would apply 

certain prudential standards for large 

U.S. banking organizations based on the 

same categories. The proposal would 

not amend the capital and liquidity 

requirements currently applicable to an 

intermediate holding company of a 

foreign banking organization or its 

subsidiary depository institutions. This 

proposal also would not amend the 

requirements applicable to Federal 

branches or agencies of foreign banking 

organizations. 

DATES: Comments must be received by 

January 22, 2019. 

ADDRESSES: Comments should be 

directed to: OCC: You may submit 

comments to the OCC by any of the 

methods set forth below. Commenters 

are encouraged to submit comments 

through the Federal eRulemaking Portal 

or email, if possible. Please use the title 

‘‘Proposed Changes to Thresholds 

Applicable to Regulatory Capital and 

Liquidity Requirements’’ to facilitate the 

organization and distribution of the 

comments. You may submit comments 

by any of the following methods: 

• Federal eRulemaking Portal— 

‘‘regulations.gov’’: Go to 

www.regulations.gov. Enter ‘‘Docket ID 

OCC–2018–0037’’ in the Search Box and 

click ‘‘Search.’’ Click on ‘‘Comment 

Now’’ to submit public comments. Click 

on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov, 

including instructions for submitting 

public comments. 

• Email: regs.comments@

occ.treas.gov. 

• Mail: Legislative and Regulatory 

Activities Division, Office of the 

Comptroller of the Currency, 400 7th 

Street SW, Suite 3E–218, Washington, 

DC 20219. 

• Hand Delivery/Courier: 400 7th 

Street SW, Suite 3E–218, Washington, 

DC 20219. 

• Fax: (571) 465–4326. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

ID OCC–2018–0037’’ in your comment. 

In general, the OCC will enter all 

comments received into the docket and 

publish them on the Regulations.gov 

website without change, including any 

business or personal information that 

you provide such as name and address 

information, email addresses, or phone 

numbers. Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

include any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

You may review comments and other 

related materials that pertain to this 

rulemaking action by any of the 

following methods: 

• Viewing Comments Electronically: 

Go to www.regulations.gov. Enter 

‘‘Docket ID OCC–2018–0037’’ in the 

Search box and click ‘‘Search.’’ Click on 

‘‘Open Docket Folder’’ on the right side 

of the screen and then ‘‘Comments.’’ 

Comments and supporting materials can 

be filtered by clicking on ‘‘View all 

documents and comments in this 

docket’’ and then using the filtering 

tools on the left side of the screen. Click 

on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov. 

The docket may be viewed after the 

close of the comment period in the same 

manner as during the comment period. 

• Viewing Comments Personally: You 

may personally inspect comments at the 

OCC, 400 7th Street SW, Washington, 

DC 20219. For security reasons, the OCC 

requires that visitors make an 

appointment to inspect comments. You 

may do so by calling (202) 649–6700 or, 

for persons who are hearing impaired, 

TTY, (202) 649–5597. Upon arrival, 

visitors will be required to present valid 

government-issued photo identification 

and submit to security screening in 

order to inspect comments. 

Board: You may submit comments, 

identified by Docket No. R–1628, by any 

of the following methods: 

• Agency Website: http://

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Email: regs.comments@

federalreserve.gov. Include docket 

number in the subject line of the 

message. 

• FAX: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Ann E. Misback, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. All public comments will be 

made available on the Board’s website at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm as 

submitted, unless modified for technical 

reasons or to remove personally 

identifiable information at the 

commenter’s request. Accordingly, 

comments will not be edited to remove 

any identifying or contact information. 

Public comments may also be viewed 

electronically or in paper in Room 3515, 

1801 K Street NW (between 18th and 

19th Streets NW), between 9:00 a.m. and 

5:00 p.m. on weekdays. 

FDIC: You may submit comments, 

identified by RIN 3064–AE96, by any of 

the following methods: 

• Agency Website: http://

www.FDIC.gov/regulations/laws/ 

federal/propose.html. Follow 

instructions for submitting comments 

on the Agency website. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments/Legal 

ESS, Federal Deposit Insurance 

Corporation, 550 17th Street NW, 

Washington, DC 20429. 

• Hand Delivered/Courier: Comments 

may be hand-delivered to the guard 

station at the rear of the 550 17th Street 

Building (located on F Street) on 


amozie on DSK3GDR082PROD with PROPOSALS4
Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 66025 

1Covered intermediate holding companies shall 

remain subject to this part as in effect on October 

31, 2018, until the Board amends the liquidity risk 

measurement standards applicable to the 

subsidiaries of foreign banking organizations in 

effect on October 31, 2018. 

2Banking organizations subject to the agencies’ 

capital rule include national banks, state member 

banks, insured state nonmember banks, savings 

associations, and top-tier bank holding companies 

and savings and loan holding companies domiciled 

in the United States not subject to the Board’s Small 

Bank Holding Company and Savings and Loan 

Holding Company Policy Statement (12 CFR part 

225, appendix C, and 12 CFR 238.9), excluding 

certain savings and loan holding companies that are 

substantially engaged in insurance underwriting or 

commercial activities or that are estate trusts, and 

bank holding companies and savings and loan 

holding companies that are employee stock 

ownership plans. 

3See 79 FR 61440 (October 10, 2014), codified at 

12 CFR part 50 (OCC), 12 CFR part 249 (Board), and 

12 CFR part 329 (FDIC). 

4These enhanced liquidity standards require a 

bank holding company to establish and maintain 

robust liquidity risk management practices, perform 

internal stress tests for determining the adequacy of 

their liquidity resources, and maintain a buffer of 

highly liquid assets to cover cash flow needs under 

stress. See 12 CFR part 252. 

5For depository institution holding companies 

with $50 billion or more, but less than $250 billion, 

in total consolidated assets and less than $10 billion 

in on-balance sheet foreign exposure, the Board 

separately adopted a modified LCR requirement, 

described further below. 12 CFR 249 subpart G. 

6 ‘‘Net Stable Funding Ratio: Liquidity Risk 

Measurement Standards and Disclosure 

Requirements; Proposed Rule,’’ 81 FR 35124 (June 

1, 2016). For depository institution holding 

companies with $50 billion or more, but less than 

$250 billion, in total consolidated assets and less 

than $10 billion in total on-balance sheet foreign 

exposure, the Board separately proposed a modified 

NSFR requirement. 

business days between 7:00 a.m. and 

5:00 p.m. 

• Email: comments@FDIC.gov. 

Include RIN 3064–AE96 on the subject 

line of the message. 

• Public Inspection: All comments 

received must include the agency name 

and RIN 3064–AE96 for this rulemaking. 

All comments received will be posted 

without change to http://www.fdic.gov/ 

regulations/laws/federal/, including any 

personal information provided. Paper 

copies of public comments may be 

ordered from the FDIC Public 

Information Center, 3501 North Fairfax 

Drive, Room E–1002, Arlington, VA 

22226 by telephone at (877) 275–3342 or 

(703) 562–2200. 

FOR FURTHER INFORMATION CONTACT:

OCC: Mark Ginsberg, Senior Risk 

Expert, or Venus Fan, Risk Expert, 

Capital and Regulatory Policy, (202) 

649–6370; James Weinberger, Technical 

Expert, Treasury & Market Risk Policy, 

(202) 649–6360; or Carl Kaminski, 

Special Counsel, Henry Barkhausen, 

Counsel, or Daniel Perez, Attorney, 

Chief Counsel’s Office, (202) 649–5490, 

or for persons who are hearing 

impaired, TTY, (202) 649–5597, Office 

of the Comptroller of the Currency, 400 

7th Street SW, Washington, DC 20219. 

Board: Constance M. Horsley, Deputy 

Associate Director, (202) 452–5239; 

Elizabeth MacDonald, Manager, (202) 

475–6216; Brian Chernoff, Senior 

Supervisory Financial Analyst, (202) 

452–2952; Sean Healey, Supervisory 

Financial Analyst, (202) 912–4611; 

Matthew McQueeney, Supervisory 

Financial Analyst (202) 452–2942; 

Christopher Powell, Supervisory 

Financial Analyst, (202) 452–3442, 

Division of Supervision and Regulation; 

or Benjamin McDonough, Assistant 

General Counsel (202) 452–2036; Asad 

Kudiya, Counsel, (202) 475–6358; Mary 

Watkins, Senior Attorney (202) 452– 

3722; Alyssa O’Connor, Attorney, (202) 

452–3886, Legal Division, Board of 

Governors of the Federal Reserve 

System, 20th and C Streets NW, 

Washington, DC 20551. For the hearing 

impaired only, Telecommunication 

Device for the Deaf (TDD), (202) 263– 

4869. 

FDIC: Benedetto Bosco, Chief, Capital 

Policy Section, bbosco@fdic.gov; 

Stephanie Lorek, Senior Policy Analyst, 

slorek@fdic.gov; Michael Maloney, 

Senior Policy Analyst, mmaloney@

fdic.gov; regulatorycapital@fdic.gov; 

Michael E. Spencer, Chief, Capital 

Markets Strategies Section, 

michspencer@fdic.gov; Eric W. 

Schatten, Senior Policy Analyst, 

eschatten@fdic.gov; Andrew D. 

Carayiannis, Senior Policy Analyst, 

acarayiannis@fdic.gov; Capital Markets 

Branch, Division of Risk Management 

Supervision, (202) 898–6888; Michael 

Phillips, Acting Supervisory Counsel, 

mphillips@fdic.gov; Catherine Wood, 

Counsel, cawood@fdic.gov; Suzanne 

Dawley, Counsel, sudawley@fdic.gov; 

Andrew B. Williams II, Counsel, 

andwilliams@fdic.gov; Catherine 

Topping, Counsel, ctopping@fdic.gov; or 

Alexander Bonander, Attorney, 

abonander@fdic.gov; Supervision and 

Legislation Branch, Legal Division, 

Federal Deposit Insurance Corporation, 

550 17th Street NW, Washington, DC 

20429. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background and Summary of Proposal 

II. Proposal 

A. Scope of Application 

B. Scoping Criteria for Proposed Categories 

1. Size 

2. Other Risk-Based Indicators 

a. Cross-Jurisdictional Activity 

b. Weighted Short-Term Wholesale 

Funding 

c. Nonbank Assets 

d. Off-Balance Sheet Exposure 

3. Alternative Scoping Criteria 

4. Determination of Applicable Category of 

Standards 

C. Proposed Regulatory Framework 

1. Category I Standards 

2. Category II Standards 

3. Category III Standards 

4. Category IV Standards 

III. Impact Analysis 

IV. Administrative Law Matters 

A. Paperwork Reduction Act 

B. Regulatory Flexibility Act Analysis 

C. Plain Language 

D. OCC Unfunded Mandates Reform Act of 

1995 Determination 

E. Riegle Community Development and 

Regulatory Improvement Act of 1994 

I. Background and Summary of 

Proposal 

In 2013, the Office of the Comptroller 

of the Currency (OCC), the Board of 

Governors of the Federal Reserve 

System (Board), and the Federal Deposit 

Insurance Corporation (FDIC) 

(collectively, the agencies) adopted a 

revised regulatory capital rule (capital 

rule) that, among other things, 

addressed weaknesses in the regulatory 

framework that became apparent in the 

2007–2009 financial crisis.1 The capital 

rule strengthened the capital 

requirements applicable to banking 

organizations 2 supervised by the 

agencies by improving both the quality 

and quantity of regulatory capital and 

increasing the risk-sensitivity of capital 

requirements. In addition, to improve 

the banking sector’s resiliency to 

liquidity stress and to improve the 

ability of large and internationally 

active banking organizations to monitor 

and manage liquidity risk, the agencies 

adopted the liquidity coverage ratio 

(LCR) rule in 2014,3 and the Board 

implemented enhanced liquidity 

standards 4 for the largest depository 

institution holding companies. 

Companies subject to the LCR rule must 

maintain an amount of high-quality 

liquid assets (HQLA) equal to or greater 

than their projected total net cash 

outflows over a prospective 30 calendarday period.5 Finally, on June 1, 2016, 

the agencies invited comment on a 

proposed rule to implement a net stable 

funding ratio (NSFR) requirement.6 The 

proposed NSFR rule would establish a 

quantitative metric to measure and help 

ensure the stability of the funding 

profile of a banking organization over a 

one-year time horizon. 

Many of the agencies’ current rules, 

including the capital rule, the LCR rule, 

and the proposed NSFR rule, 

differentiate among banking 

organizations based on one or more risk 

indicators, such as total asset size and 

foreign exposure. Specifically, the 

capital rule categorizes banking 

organizations into two groups: (i) 


amozie on DSK3GDR082PROD with PROPOSALS4
66026 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

7See 12 CFR part 217, subparts D & E (Board); 

12 CFR part 3 (OCC), Subparts D & E; 12 CFR part 

324, subparts D & E (FDIC). 

8See 12 CFR 217.1(c), 12 CFR 217.100(b) (Board); 

12 CFR 3.1(c), 12 CFR 3.100(b) (OCC); 12 CFR 

324.1(c), 12 CFR 324.100(b) (FDIC). U.S. global 

systemically important bank holding companies 

(GSIBs) form a sub-category of advanced 

approaches banking organizations. 

9Also referred to as the ‘‘generally applicable’’ 

risk-based capital requirements. 

10The FDIC and OCC apply an enhanced 

supplementary leverage ratio standard to insured 

depository institution subsidiaries of U.S. top-tier 

bank holding companies with more than $700 

billion in total consolidated assets or more than $10 

trillion in total assets under custody, while the 

Board’s regulation applies these requirements to 

insured depository institution subsidiaries of U.S. 

GSIBs. There is currently no difference between the 

holding companies identified by these regulations, 

and the OCC has proposed to amend its regulation 

to reference the Board’s U.S. GSIB definition. See 

Regulatory Capital Rules: Regulatory Capital, 

Enhanced Supplementary Leverage Ratio Standards 

for U.S. Global Systemically Important Bank 

Holding Companies and Certain of Their Subsidiary 

Insured Depository Institutions; Total LossAbsorbing Capacity Requirements for U.S. Global 

Systemically Important Bank Holding Companies, 

83 FR 17317 (proposed April 19, 2018). 

11See 12 CFR 249.1. 

12This proposal is part of the agencies’ ongoing 

effort to review their respective capital and 

liquidity requirements to determine how best to 

tailor their application based on the size, 

complexity, and overall risk profile of banking 

organizations. Consistent with these efforts, the 

agencies also intend to issue a proposal to 

implement section 201 of the Economic Growth, 

Regulatory Relief, and Consumer Protection Act 

(EGRRCPA), which requires the agencies to revise 

the capital requirements applicable to certain 

banking organizations with less than $10 billion in 

total consolidated assets. See Public Law 115–174, 

132 Stat. 1296 (2018). 

13Separately, the Board is requesting comment on 

a proposed rule (the Board-only proposal) that 

would tailor certain prudential standards for large 

domestic banking organizations based on the same 

categories. In particular, and consistent with section 

401 of EGRRCPA, the Board-only proposal would 

further tailor the application of existing prudential 

standards relating to liquidity, risk management, 

stress testing, and single-counterparty credit limits. 

In order to appropriately tailor the prudential 

requirements, the Board-only proposal incorporates 

the four categories of prudential standards for 

banking organizations described in this proposal. In 

addition, the Board-only proposal would apply 

prudential standards to certain large savings and 

loan holding companies (other than those 

substantially engaged in insurance underwriting or 

commercial activities), using the same categories, to 

further their safety and soundness. The agencies 

encourage commenters to review this proposal 

together with the Board-only proposal. 

14See ‘‘Simplifications to the Capital Rule 

Pursuant to the Economic Growth and Regulatory 

Paperwork Reduction Act of 1996.’’ 82 FR 49984 

(October 27, 2017). 

Banking organizations subject solely to 

the generally applicable risk-based 

capital rules, 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),7 and (ii) 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).8 Standardized 

approach banking organizations must 

calculate risk-weighted assets using the 

standardized approach 9 and calculate a 

leverage ratio that measures regulatory 

capital relative to on-balance sheet 

assets. Advanced approaches banking 

organizations must use both the internal 

models-based advanced approaches and 

the standardized approach to determine 

their risk-based capital ratios. They also 

must calculate a supplementary leverage 

ratio, which measures regulatory capital 

relative to on-balance sheet and certain 

off-balance sheet exposures, in addition 

to the leverage ratio described above. In 

addition, when calculating their 

regulatory capital levels, advanced 

approaches banking organizations are 

required to include most elements of 

accumulated other comprehensive 

income (AOCI) in regulatory capital, 

which better reflects the loss-absorbing 

capacity of a banking organization at a 

specific point in time, but can also 

result in regulatory capital volatility and 

require more sophisticated capital 

planning and asset-liability 

management. 

Additional capital requirements apply 

to U.S. GSIBs beyond those applicable 

to advanced approaches banking 

organizations, which are intended to 

increase their resiliency as the largest, 

most interconnected and systemically 

risky banking organizations. First, a 

risk-based capital surcharge applies to 

U.S. GSIBs at the top-tier bank holding 

company level, calibrated to reflect their 

systemic footprint. Second, an enhanced 

supplementary leverage ratio standard 

applies to U.S. GSIBs and their insured 

depository institution subsidiaries.10

With respect to the liquidity rules, the 

LCR rule also distinguishes between 

banking organizations based on total 

asset size and foreign exposure. The full 

LCR requirement generally applies to 

banking organizations that meet the 

advanced approaches thresholds and to 

their subsidiary depository institutions 

with total consolidated assets of $10 

billion or more.11 The Board’s 

regulations also apply a less stringent, 

modified LCR requirement to depository 

institution holding companies that do 

not meet the advanced approaches 

thresholds but have more than $50 

billion in total consolidated assets. The 

proposed NSFR requirement would 

apply to the same banking organizations 

as the current LCR requirement. 

Similarly, under the NSFR proposal, the 

Board proposed to apply a less 

stringent, modified NSFR requirement 

to the same depository institution 

holding companies that are subject to 

the modified LCR requirement. 

The scoping criteria of the regulations 

described above rely on a definition of 

advanced approaches banking 

organization that the agencies 

introduced in 2007 in connection with 

the adoption of the advanced 

approaches risk-based capital rule. The 

thresholds established by the definition 

were designed to include the largest and 

most internationally active banking 

organizations. In implementing the 

liquidity rules, the agencies relied on 

these same thresholds, recognizing the 

applicable banking organizations have 

balance sheet compositions, off-balance 

sheet activities, and funding profiles 

that lead to larger and more complex 

liquidity profiles. 

The agencies are proposing 

modifications to their capital and 

liquidity rules that would revise the 

criteria for determining the prudential 

standards that apply to large banking 

organizations operating in the United 

States (the proposal).12 Specifically, the 

agencies are proposing to (i) amend the 

scope of certain aspects of the regulatory 

capital rule and the LCR rule; and (ii) repropose the scope of the NSFR rule. The 

proposal would update the current 

regulatory distinction between 

advanced approaches and standardized 

approach banking organizations and 

further tailor the capital and liquidity 

requirements applicable to large 

banking organizations according to riskbased indicators. Specifically, for 

banking organizations with total 

consolidated assets of $100 billion or 

more, the proposal would establish four 

categories of standards based on size, 

cross-jurisdictional activity, weighted 

short-term wholesale funding, offbalance sheet exposure, and nonbank 

assets. Section II.B of this 

Supplementary Information section 

below discusses the proposed scoping 

criteria for each of these categories, and 

section II.C describes the capital and 

liquidity requirements proposed for 

each category of standards.13

The agencies note that there are 

currently additional outstanding notices 

of proposed rulemaking that make 

reference to the advanced approaches 

thresholds to set the scope of 

application, relating to simplifications 

to the agencies’ capital rule (issued 

October 2017) 14 and a standardized 

approach to calculating derivative 


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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 66027 

15See ‘‘Regulatory Capital Rule: Standardized 

Approach for Calculating the Exposure Amount of 

Derivative Contracts,’’ available at https://

www.occ.treas.gov/news-issuances/news-releases/ 

2018/nr-ia-2018-114.html. 16See ‘‘Basel III: Finalising post-crisis reforms,’’ 

available at https://www.bis.org/bcbs/publ/ 

d424.htm. The BCBS is a committee of banking 

supervisory authorities, which was established by 

the central bank governors of the G–10 countries in 

1975. More information regarding the BCBS and its 

membership is available at http://www.bis.org/bcbs/ 

about.htm. Documents issued by the BCBS are 

available through the Bank for International 

Settlements website at http://www.bis.org. 

17Bank holding companies and savings and loan 

holding companies with less than $3 billion in total 

consolidated assets and that meet certain additional 

criteria are not subject to the capital rule pursuant 

to the Board’s small bank holding company policy 

statement. See 12 CFR 217.1(c)(1)(ii) and (iii); 12 

CFR part 225, appendix C; 12 CFR 238.9. 

18Public Law 111–203, 124 Stat. 1376 (2010). 

exposures (issued October 2018).15 For 

purposes of considering and 

commenting on those pending notices, 

the requirements that would apply to 

‘‘advanced approaches banking 

organizations’’ under those notices of 

proposed rulemaking would be 

included as Category I and II standards 

under this proposal. For purposes of 

considering and commenting on those 

pending notices, the requirements that 

would apply to ‘‘advanced approaches 

banking organizations’’ under those 

outstanding notices of proposed 

rulemaking would be included as 

Category I and II standards under this 

proposal. Furthermore, the agencies 

note that they are still considering 

amendments to their capital rule that 

would take into account final Basel III 

reforms adopted by the Basel Committee 

on Banking Supervision (BCBS) in 

December of 2017.16

II. Proposal 

Post-crisis regulatory reforms, which 

include the agencies’ capital and 

liquidity standards, have resulted in 

significant enhancements to financial 

stability and the safety and soundness of 

banking organizations. The agencies 

continue to evaluate the requirements of 

these measures to ensure that they meet 

their objectives in a manner that 

minimizes unintended consequences 

and aligns with banking organizations’ 

risk profiles. These efforts include 

assessing the costs and benefits of 

regulations as well as exploring 

alternative approaches that achieve 

regulatory objectives but improve upon 

the simplicity, transparency, and 

efficiency of the regime. The proposal 

builds on the agencies’ existing practice 

of tailoring capital and liquidity 

requirements based on the size, 

complexity, and overall risk profile of 

banking organizations. 

The proposal would make changes 

that would further distinguish 

applicable capital and liquidity 

standards on the basis of risk. Under the 

proposal, the most stringent standards 

would continue to apply to banking 

organizations that present the greatest 

systemic risks. For other banking 

organizations, the proposal would refine 

the application of capital and liquidity 

standards based on these banking 

organizations’ risk profiles, consistent 

with safety and soundness and financial 

stability. 

Under the proposal, the most 

stringent set of standards (Category I) 

would apply to U.S. GSIBs and their 

subsidiary depository institutions. 

These banking organizations have the 

potential to pose the greatest risks to 

U.S. financial stability due to their 

systemic risk profiles. The existing postfinancial crisis framework for U.S. 

GSIBs has resulted in significant gains 

in resiliency and risk management. The 

proposal accordingly would maintain 

the most stringent standards for these 

banking organizations, which are 

generally consistent with the standards 

developed by the BCBS, subject to 

notice and comment rulemaking in the 

United States. 

The second set of standards (Category 

II) would apply to banking organizations 

that are very large or have significant 

international activity. Like Category I, 

the agencies intend for Category II 

standards to be consistent with 

standards developed by the BCBS, 

subject to notice and comment 

rulemaking in the United States. The 

application of consistent prudential 

standards across jurisdictions to 

banking organizations with significant 

size or cross-jurisdictional activity helps 

to promote competitive equity among 

U.S. banking organizations and their 

foreign peers and competitors, and to 

reduce opportunities for regulatory 

arbitrage, while applying standards that 

appropriately reflect the risk profiles of 

banking organizations in this category. 

In addition, consistency of standards 

can facilitate U.S. banking 

organizations’ regulatory compliance in 

foreign markets. Category II standards 

would also reflect the risks associated 

with these banking organizations’ very 

large size or cross-border operations. 

The third set of standards (Category 

III) would apply to banking 

organizations with total consolidated 

assets of $250 billion or more that do 

not meet the criteria for Category I or II, 

and to other banking organizations with 

total consolidated assets of $100 billion 

or more, but less than $250 billion, that 

meet or exceed specified indicators of 

risk. Category III standards would reflect 

these banking organizations’ heightened 

risk profiles relative to smaller and less 

complex banking organizations. 

The fourth set of standards (Category 

IV) would apply to banking 

organizations with total consolidated 

assets of $100 billion or more that do 

not meet the thresholds for one of the 

other categories. These banking 

organizations generally have greater 

scale and operational and managerial 

complexity relative to smaller banking 

organizations, but less than banking 

organizations that would be subject to 

Category I, II, or III standards. In 

addition, the failure or distress of one or 

more banking organizations that would 

be subject to Category IV standards, 

while not likely to have as significant of 

an impact on financial stability as the 

failure or distress of a firm subject to 

Category I, II or III standards, could 

nonetheless have a more significant 

negative effect on economic growth and 

employment relative to the failure or 

distress of smaller banking 

organizations. Category IV standards are 

therefore less stringent than Category III 

standards, reflecting the lower risk 

profile of these banking organizations 

relative to other banking organizations 

with $100 billion or more in total 

consolidated assets. For example, based 

on the size and risk profile of these 

banking organizations, the proposal 

would remove applicability of the LCR 

rule and proposed NSFR rule for 

banking organizations subject to 

Category IV standards. As a result, firms 

subject to Category IV standards would 

generally face the same capital and 

liquidity regulatory requirements as 

banking organizations under $100 

billion in total consolidated assets.17

Unlike firms with less than $100 billion 

in total consolidated assets, however, 

firms subject to Category IV standards 

would be required to monitor and report 

certain risk-based indicators, as 

described further below. 

A. Scope of Application 

The next section II.B describes the 

proposed criteria for determining which 

of the four proposed categories of 

standards applies to a banking 

organization with total consolidated 

assets of $100 billion or more and its 

subsidiary depository institutions. The 

proposed categories and criteria are 

consistent with the considerations and 

factors set forth in section 165 of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act),18 as amended by EGRRCPA, and 

with the categories of prudential 

standards in the Board-only proposal. 

The proposal would not amend the 

capital and liquidity requirements 


amozie on DSK3GDR082PROD with PROPOSALS4
66028 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

19The Board continues to consider the 

appropriate way to assign the U.S. operations of 

foreign banking organizations to the categories of 

standards described in this proposal, in light of the 

special structures through which these banking 

organizations conduct business in the United 

States. The Board plans to develop a separate 

proposal relating to foreign banking organizations 

and their U.S. operations. 

20See 12 CFR part 217, subpart H; see also 

‘‘Regulatory Capital Rules: Implementation of RiskBased Capital Surcharges for Global Systemically 

Important Bank Holding Companies; Final Rule,’’ 

80 FR 49082 (August 14, 2015). 

21As an alternative, the agencies are also 

requesting comment on a score-based approach, 

which would differentiate requirements for banking 

organizations using an aggregated ‘‘score’’ across 

multiple measures of risk. Section II.B.3 of this 

Supplementary Information section describes this 

proposed alternative. 

22When reviewing agency interpretations of 

statutes that require an agency to ‘‘take into 

account’’ or ‘‘take into consideration’’ a number of 

factors, courts generally defer to the expertise of the 

agency in determining how to apply the factors and 

the relative weight given to each factor. See, e.g., 

National Wildlife Federation v. EPA, 286 F.3d 554, 

570 (D.C. Cir. 2002); Lignite Energy v. EPA, 198 

F.3d 930, 933 (D.C. Cir. 1999); Trans World 

Airlines, Inc. v. Civil Aeronautics Board, 637 F.2d 

62, 67–68 (2d Cir. 1980); Weyerhaeuser v. EPA, 590 

F.2d 1011, 1046 (D.C. Cir. 1978); Sec’y of Agric. v. 

Cent. Roig Ref. Co., 338 U.S. 604, 611–12 (1950). 

applicable to an intermediate holding 

company or its subsidiary depository 

institutions or the bank holding 

company subsidiary of a foreign banking 

organization.19 This proposal also 

would not amend the requirements 

applicable to Federal branches or 

agencies of foreign banking 

organizations. 

The proposal would apply the same 

category of standards to both the top-tier 

holding company and its subsidiary 

depository institutions. With respect to 

capital, the proposal would apply the 

same requirements to a subsidiary 

depository institution of a holding 

company as would apply at the holding 

company level. This treatment aligns 

with the agencies’ longstanding policy 

of applying similar standards to holding 

companies and their subsidiary 

depository institutions. For example, 

since 2007 the agencies have generally 

required depository institutions to apply 

the advanced approaches capital 

requirements if their parent holding 

company is identified as an advanced 

approaches banking organization. This 

approach serves as an important 

safeguard against arbitrage among 

affiliated banks that would otherwise be 

subject to substantially different 

regulatory requirements. With respect to 

liquidity, subsidiary depository 

institutions of a holding company 

subject to the full LCR and the proposed 

full NSFR with $10 billion or more in 

total consolidated assets at the 

depository institution level are also 

subject to the LCR requirement and 

would be subject to the proposed NSFR 

requirement. Large subsidiary 

depository institutions play a significant 

role in a covered company’s funding 

structure, and in the operation of the 

payments system. These large 

subsidiaries generally also have access 

to deposit insurance coverage. 

Accordingly, the proposal would 

maintain the application of the LCR and 

proposed NSFR requirements to these 

large subsidiary depository institutions. 

Question 1: The agencies invite 

comment on the advantages and 

disadvantages of assigning a category of 

standards to a subsidiary depository 

institution based on the category 

assigned to its top-tier parent holding 

company. What would be the 

advantages and disadvantages of relying 

on the top-tier holding company’s 

categorization and, under this 

approach, how should these standards 

be applied at the subsidiary depository 

institution? If commenters prefer an 

alternative approach to relying on the 

top-tier holding company’s 

categorization, please describe any 

alternative scoping criteria that the 

agencies should consider for 

categorizing subsidiary depository 

institutions. If an alternative approach 

were applied, what increases in 

compliance costs or operational 

challenges could arise if a subsidiary 

depository institution were subject to a 

different category of standards than its 

top-tier parent holding company? 

B. Scoping Criteria for Proposed 

Categories 

Where possible, the proposal would 

rely on indicators and thresholds 

already used in the agencies’ existing 

regulatory frameworks or reported by 

large U.S. bank holding companies or 

savings and loan holding companies. As 

described further below, these 

categories would be defined based on 

the following criteria: 

• Category I standards would apply to 

U.S. GSIBs and their subsidiary 

depository institutions. 

• Category II standards would apply 

to banking organizations with $700 

billion or more in total consolidated 

assets or $75 billion or more in crossjurisdictional activity that are not 

subject to Category I standards and to 

their subsidiary depository institutions. 

• Category III standards would apply 

to banking organizations that are not 

subject to Category I or II standards and 

that have $250 billion or more in total 

consolidated assets or $75 billion or 

more in any of the following indicators: 

Nonbank assets, weighted short-term 

wholesale funding, or off-balance-sheet 

exposures. Category III standards would 

also apply to the subsidiary depository 

institutions of any holding companies 

subject to Category III standards. 

• Category IV standards would apply 

to banking organizations with at least 

$100 billion in total consolidated assets 

that do not meet any of the thresholds 

specified for Categories I through III and 

to their subsidiary depository 

institutions. 

To determine which banking 

organizations are subject to the most 

stringent standards under Category I, the 

agencies would use the existing 

methodology under the Board’s GSIB 

surcharge rule.20 The proposal would 

not modify the requirements that 

currently apply to U.S. GSIBs and their 

subsidiary depository institutions. 

To determine the applicability of the 

remaining categories of capital and 

liquidity standards, the agencies are 

proposing to differentiate requirements 

based on a banking organization’s level 

of specific risk-based indicators.21 This 

approach is intended to allow banking 

organizations and the public to easily 

identify and predict what requirements 

will apply to a banking organization, 

and what requirements would apply if 

the characteristics of a banking 

organization change. Under the 

proposed approach, Categories II 

through IV would be defined by five 

indicators linked to a banking 

organization’s risk profile: Size, crossjurisdictional activity, weighted shortterm wholesale funding, nonbank assets, 

and off-balance sheet exposure. By 

taking into consideration the relative 

presence or absence of each risk factor, 

the proposal would provide a basis for 

assessing a banking organization’s 

financial stability and safety and 

soundness risks.22 These indicators 

generally track measures already used in 

the agencies’ existing regulatory 

framework and that banking 

organizations that would be covered by 

the proposal already publicly report at 

the holding company level. This 

approach would promote transparency 

and, for banking organizations that 

already report this information, would 

not require additional compliance costs 

to track and report. The proposed 

thresholds would apply based on the 

level of each indicator over the 

preceding four calendar quarters, as 

described further below, in order to 

account for significant changes in a 

banking organization’s risk profile that 

reflect longer term shifts in business 

activities. 

Under the proposal, a depository 

institution without a holding company 


amozie on DSK3GDR082PROD with PROPOSALS4
Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 66029 

23For example, advanced approaches capital 

requirements, the supplementary leverage ratio, and 

the LCR requirement generally apply to banking 

organizations with total consolidated assets of $250 

billion or more or total consolidated on-balance 

sheet foreign exposure of $10 billion or more. 

24See Amy G. Lorenc, and Jeffery Y. Zhang 

(2018). ‘‘The Differential Impact of Bank Size on 

Systemic Risk,’’ Finance and Economics Discussion 

Series 2018–066. Washington: Board of Governors 

of the Federal Reserve System, available at: https:// 

doi.org/10.17016/FEDS.2018.066. 

25 Id. 

26 Id. 

27Washington Mutual, a savings and loan holding 

company, had approximately $300 billion in assets 

at the time of failure. After the collapse of Lehman 

Brothers, Washington Mutual experienced 

significant deposit outflows and was unable to raise 

funds to improve its liquidity position. In 

September 2008, the Office of Thrift Supervision, 

Washington Mutual’s primary regulator, determined 

that the firm had insufficient liquidity to meet its 

obligations, closed the firm, and appointed the 

FDIC as the receiver. Washington Mutual was 

thereafter acquired by another firm. The FDIC 

estimated that it would have cost $42 billion to 

liquidate Washington Mutual, a sum that would 

have depleted the entire balance of the Deposit 

Insurance Fund at the time. See Offices of Inspector 

General, U.S. Department of Treasury and FDIC, 

Evaluation of Federal Regulatory Oversight of 

Washington Mutual Bank (April 2010), available at: 

https://www.fdicig.gov/sites/default/files/ 

publications/10-002EV.pdf. 

28See EGRRCPA § 401. 

would be required to calculate these 

risk-based indicators, apart from size, 

based upon the instructions of certain 

reports that are required to be filed by 

holding companies, including the 

Banking Organization Systemic Risk 

Report (FR Y–15) and the Parent 

Company Only Financial Statements for 

Large Holding Companies (FR Y–9LP). 

Specifically, such a depository 

institution would need to report crossjurisdictional activity, weighted shortterm wholesale funding, off-balance 

sheet exposure, and nonbank asset 

indicator data to its agency supervisory 

staff for the purpose of determining 

which capital and liquidity regulations 

would apply. 

Question 2: The agencies invite 

comment on the advantages and 

disadvantages of requiring a depository 

institution without a holding company 

to calculate indicators according to this 

approach. What operational 

complexities and challenges would arise 

if the agencies adopted this approach? 

What additional information could the 

agencies incorporate into the 

Consolidated Reports of Condition and 

Income (Call Reports), or other reports 

currently required of depository 

institutions, to replicate the calculation 

methodology for these indicators such 

as the measure of foreign assets and 

liabilities captured in the FR Y–15? 

What existing information is currently 

reported by depository institutions that 

could be used to replicate the 

calculation methodologies described 

under the proposal? What alternative 

indicators and related reporting 

requirements should the agencies 

consider to apply the proposal to large 

depository institutions without holding 

companies? 

1. Size 

The proposal would measure size 

based on a banking organization’s total 

consolidated assets. The agencies have 

previously used size as a simple 

measure of a banking organization’s 

potential systemic impact as well as 

safety and soundness risks.23

The effect of a large banking 

organization’s failure on the economy is 

likely to be greater than that which 

occurs when a smaller banking 

organization fails, even though the two 

banking organizations might be engaged 

in similar business lines.24 Board staff 

estimates that stress at a single large 

banking organization with an assumed 

$100 billion in deposits would result in 

approximately a 107 percent decline in 

quarterly real GDP growth, whereas 

stress among five smaller banking 

organizations—each with an assumed 

$20 billion in deposits—would result in 

roughly a 22 percent decline in 

quarterly real GDP growth.25 Both 

scenarios assume $100 billion in total 

deposits, but the negative impact is 

greatest when larger banking 

organizations fail. 

In general, a banking organization’s 

size also provides a measure of the 

extent to which customers or 

counterparties may be exposed to a risk 

of loss or suffer a disruption in the 

provision of services if a banking 

organization were to experience 

distress, and the extent to which asset 

fire sales by a banking organization 

could transmit distress to other market 

participants, given that a larger banking 

organization has more assets to sell. In 

addition, the large size of a banking 

organization may give rise to challenges 

that may complicate resolution of the 

firm if it were to fail. 

The size of a banking organization can 

also be an indication of operational and 

managerial complexity, which can 

present safety and soundness risks even 

when a banking organization is not 

engaged in complex business lines. A 

larger banking organization operates on 

a larger scale, has a broader geographic 

scope, and generally will have more 

complex internal operations than a 

smaller banking organization, resulting 

in greater risks to safety and soundness. 

The proposal would establish 

thresholds of $700 billion, $250 billion, 

and $100 billion in total consolidated 

assets for Category II, III, and IV 

requirements, respectively, for banking 

organizations that are not U.S. GSIBs. A 

holding company with $700 billion or 

more in total consolidated assets, and its 

subsidiary depository institutions, 

would be subject to Category II 

requirements in order to address the 

substantial risks that can arise from the 

activities and potential distress of very 

large banking organizations that are not 

U.S. GSIBs. Historical examples suggest 

that a banking organization of this size 

should be subject to stringent prudential 

standards. For example, during the 

financial crisis, significant losses at 

Wachovia Corporation, which had $780 

billion in assets at the time of being 

acquired in distress, had a destabilizing 

effect on the financial system. A 

threshold of $700 billion or more in 

total consolidated assets would ensure 

that a banking organization with a size 

of similar magnitude would be subject 

to Category II standards. 

A holding company with $250 billion 

or more in total consolidated assets that 

does not meet the requirements for 

Category II, and its subsidiary 

depository institutions, would be 

subject to Category III requirements. As 

discussed above, the Board estimates 

that the failure or distress of a banking 

organization of this size would likely 

have a greater economic and financial 

stability impact than that of a smaller 

banking organization,26 and Category III 

standards would also further the safety 

and soundness of a banking 

organization of this size. The 

application of strong prudential 

standards would also be consistent with 

weaknesses and risks highlighted during 

the financial crisis with banking 

organizations of this size, such as 

Washington Mutual.27 A threshold of 

this level would also align with the 

$250 billion statutory asset threshold 

under EGRRCPA, above which the 

Board must apply enhanced prudential 

standards to a bank holding company.28

In the Board-only proposal, the Board 

is proposing to apply certain 

requirements as Category IV standards 

to bank holding companies and certain 

savings and loan holding companies 

with $100 billion or more in total 

consolidated assets that do not meet the 

criteria for Category I, II, or III. As 

discussed in section II.C.4 of this 

Supplementary Information section, 

based on the risk profiles of banking 

organizations that would be subject to 

Category IV standards, the agencies are 

proposing not to apply to banking 

organizations that meet the Category IV 

criteria additional requirements under 


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66030 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

29Because a size threshold of $250 billion in total 

consolidated assets also would apply for Category 

III, the weighted short-term wholesale funding, 

nonbank assets, and off-balance sheet exposure 

indicators would only have effect for a banking 

organization with total consolidated assets of $100 

billion or more, but less than $250 billion. 

Similarly, the proposed cross-jurisdictional activity 

threshold would only have effect for a banking 

organization with total consolidated assets of $100 

billion or more, but less than $700 billion. 

30See 12 CFR 217.100(b)(1) (Board), 12 CFR 

324.100(b)(1) (FDIC), 12 CFR 3.100(b)(1) (OCC). 

31See 12 CFR 249.1(b)(ii) (Board), 12 CFR 

329.1(b)(ii)(FDIC), 12 CFR 50.1(b)(ii) (OCC). 

32Specifically, short-term wholesale funding is 

the amount of a banking organization’s funding 

obtained from wholesale counterparties or retail 

brokered deposits and sweeps with a remaining 

maturity of one year or less. Categories of short-term 

wholesale funding are then weighted based on four 

residual maturity buckets; the asset class of 

collateral, if any, backing the funding; and 

characteristics of the counterparty. Weightings 

reflect risk of runs and attendant fire sales. See 12 

CFR 217.406 and Regulatory Capital Rules: 

Implementation of Risk-Based Capital Surcharges 

for Global Systemically Important Bank Holding 

Companies, 80 FR 49082 (August 14, 2015). 

the capital rule relative to generally 

applicable requirements or the LCR rule 

or proposed NSFR rule. 

Question 3: The agencies invite 

comment on the advantages and 

disadvantages of using size thresholds 

to tailor capital and liquidity 

requirements. The agencies invite 

comment on whether the inclusion of 

asset size thresholds in capital and 

liquidity standards drives changes in 

bank business models and risk profiles 

in ways that differ from the effects of 

thresholds based on other risk-based 

indicators. As an alternative to size 

thresholds, the agencies invite comment 

on whether other factors alone can 

adequately differentiate between the 

risk profiles of banking organizations 

and serve as the primary tool to tailor 

capital and liquidity requirements. 

2. Other Risk-Based Indicators 

In addition to size, the proposal 

would consider a banking organization’s 

level of cross-jurisdictional activity, 

weighted short-term wholesale funding, 

nonbank assets, and off-balance sheet 

exposure to determine the applicable 

category of standards. The agencies are 

proposing to apply a uniform threshold 

of $75 billion for each of these riskbased indicators, based on the degree of 

concentration this amount would 

represent for each banking organization. 

In each case, a threshold of $75 billion 

would represent at least 30 percent and 

as much as 75 percent of total 

consolidated assets for banking 

organizations with between $100 billion 

and $250 billion in total consolidated 

assets.29 In addition, setting the 

indicators at $75 billion would ensure 

that banking organizations that account 

for the vast majority—over 85 percent— 

of the total amount of each risk factor 

among all U.S. depository institution 

holding companies with $100 billion or 

more in total consolidated assets would 

be subject to prudential standards that 

account for the associated risks of these 

indicators, which facilitates consistent 

treatment of these risks across banking 

organizations. To the extent levels and 

the distribution of an indicator 

substantially change in the future, the 

agencies may consider modifications if 

appropriate. 

Category II standards would apply to 

a banking organization with $100 billion 

or more in total consolidated assets and 

$75 billion or more in crossjurisdictional activity to promote 

parallel treatment among banking 

organizations with large global 

operations. Category III standards would 

apply to a banking organization with 

$100 billion or more in total 

consolidated assets and at least $75 

billion in weighted short-term 

wholesale funding, nonbank assets, or 

off-balance sheet exposure. 

a. Cross-Jurisdictional Activity 

Cross-jurisdictional activity would be 

defined as the sum of crossjurisdictional assets and liabilities, as 

each is reported on the FR Y–15 by 

holding companies. Cross-jurisdictional 

activity can affect the complexity of a 

banking organization and give rise to 

challenges that may complicate the 

resolution of such a banking 

organization if it were to fail. In 

particular, foreign operations and crossborder positions add operational 

complexity in normal times and 

complicate the ability of a banking 

organization to undergo a successful 

recovery in times of stress, generating 

both safety and soundness and financial 

stability risks. For example, a banking 

organization with significant crossborder operations may require more 

sophisticated capital and liquidity 

management relating to risks of ringfencing by one or more jurisdictions 

during stress, which could impede the 

banking organization’s ability to move 

resources in one jurisdiction to meet 

needs in another. 

The agencies’ capital and liquidity 

regulations currently use foreign 

exposure as a metric to determine the 

application of certain requirements, 

such as advanced approaches capital 

requirements 30 and the LCR 

requirement.31 The proposal would 

amend these regulations to replace the 

current $10 billion foreign exposure 

threshold with a $75 billion crossjurisdictional activity threshold. 

Compared to the current foreign 

exposure measure, the proposed crossjurisdictional activity indicator includes 

foreign liabilities in addition to foreign 

assets. In addition, compared to the 

foreign exposure measure, the proposed 

cross-jurisdictional activity indicator 

does not include the assets and 

liabilities from positions in derivative 

contracts. Measuring cross-jurisdictional 

activity using both assets and 

liabilities—instead of just assets—would 

provide a broader gauge of the scale of 

a banking organization’s foreign 

operations, as it includes both 

borrowing and lending activities outside 

of the United States. 

Question 4: How should depository 

institutions report a measure of foreign 

assets and liabilities for purposes of 

calculating cross-jurisdictional activity? 

What problems would depository 

institutions face if they used the 

measure of foreign assets and liabilities 

as reported on the Country Exposure 

Report (FFIEC 009)? 

b. Weighted Short-Term Wholesale 

Funding 

The proposed weighted short-term 

wholesale funding indicator would 

track the measure currently reported on 

the FR Y–15 by holding companies and 

be consistent with the calculation used 

for purposes of the GSIB surcharge 

rule.32 This indicator provides a 

measure of a banking organization’s 

liquidity risk, as reliance on short-term, 

generally uninsured funding from more 

sophisticated counterparties can make a 

banking organization vulnerable to the 

consequences of large-scale funding 

runs. In particular, banking 

organizations that fund long-term assets 

with short-term liabilities from financial 

intermediaries such as investment funds 

may face large liquidity outflows 

resulting in the need to rapidly sell 

relatively illiquid assets to fund 

withdrawals and maintain their 

operations in a time of stress, which 

they may be able to do only at fire sale 

prices. Such asset fire sales can cause 

rapid deterioration in a banking 

organization’s financial condition and 

negatively affect broader financial 

stability by driving down asset prices 

across the market. As a result, the shortterm wholesale funding indicator 

reflects both safety and soundness and 

financial stability risks. This indicator 

also provides a measure of 

interconnectedness among market 

participants, including other financial 

sector entities, which can provide a 

mechanism for transmission of distress. 


amozie on DSK3GDR082PROD with PROPOSALS4
Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 66031 

33The proposed measure of nonbank assets also 

would include the average of the assets in each 

Edge or Agreement Corporation, but would exclude 

nonbank assets held in a savings association. 

34See Regulatory Capital Rules: Implementation 

of Risk-Based Capital Surcharges for Global 

Systemically Important Bank Holding Companies, 

80 FR 49082 (August 14, 2015). See paragraph 25 

of the ‘‘Global systemically important banks: 

Updated assessment methodology and the higher 

loss absorbency requirement,’’ which provides 

certain revisions and clarifications to the initial 

GSIB framework. The document is available at 

http://www.bis.org/publ/bcbs255.htm. 

35See William F. Bassett, Simon Gilchrist, 

Gretchen C. Weinbach, Egon Zakrajsˇek, ‘‘Improving 

Our Ability to Monitor Bank Lending,’’ chapter in 

Risk Topography: Systemic Risk and Macro 

Modeling (2014), Markus Brunnermeier and Arvind 

Krishnamurthy, ed., pp. 149–161, available at: 

http://www.nber.org/chapters/c12554. 36See, e.g., Sheri M. Markose, Systemic Risk from 

Global Financial Derivatives: A Network Analysis 

of Contagion and its Mitigation with SuperSpreader Tax, IMF Working Papers (Nov. 30, 2012), 

available at: https://www.imf.org/en/Publications/ 

WP/Issues/2016/12/31/Systemic-Risk-from-GlobalFinancial-Derivatives-A-Network-Analysis-ofContagion-and-Its-40130. 37To address these risks, the agencies have 

established restrictions relating to the qualified 

financial contracts of U.S. GSIBs, the insured 

depository institution subsidiaries of U.S. GSIBs, 

and the U.S. operations of systemically important 

foreign banking organizations. See 12 CFR part 252, 

subpart I (Board); 12 CFR part 47 (OCC); and 12 

CFR part 382 (FDIC). That rule does not apply to 

savings and loan holding companies, or to other 

large bank holding companies and insured 

depository institutions. 

38See, e.g., The Orderly Liquidation of Lehman 

Brothers Holdings Inc. under the Dodd-Frank Act, 

5 FDIC Quarterly No. 2, 31 (2011), https://

www.fdic.gov/bank/analytical/quarterly/2011-vol5- 

2/article2.pdf. 

c. Nonbank Assets 

Under the proposal, nonbank assets 

would be measured as the average 

amount of equity investments in 

nonbank subsidiaries.33 The level of a 

banking organization’s investment in 

nonbank subsidiaries provides a 

measure of the organization’s business 

and operational complexity. 

Specifically, banking organizations with 

significant investments in nonbank 

subsidiaries are more likely to have 

complex corporate structures, interaffiliate transactions, and funding 

relationships. As discussed in the 

Board’s final GSIB surcharge 

rulemaking, a banking organization’s 

complexity is positively correlated with 

the impact of its failure or distress.34

Because nonbank subsidiaries may not 

be resolved through the FDIC’s 

receivership process, significant 

investments in nonbank subsidiaries 

present heightened resolvability risk. 

Nonbank activities may involve a 

broader range of risks than those 

associated with purely banking 

activities, and can increase 

interconnectedness with other financial 

firms, requiring sophisticated risk 

management and governance, including 

capital planning, stress testing, and 

liquidity risk management. If not 

adequately managed, the risks 

associated with nonbanking activities 

could present significant safety and 

soundness concerns and increase 

financial stability risks. The failure of a 

nonbank subsidiary could be 

destabilizing to a banking organization 

and cause counterparties and creditors 

to lose confidence in the banking 

organization. Nonbank assets also reflect 

the degree to which a banking 

organization may be engaged in 

activities through legal entities that are 

not subject to separate capital 

requirements or to the direct regulation 

and supervision applicable to a 

regulated banking entity. 

d. Off-Balance Sheet Exposure 

Off-balance sheet exposure 

complements the measure of size by 

taking into consideration financial and 

banking activities not reflected on a 

banking organization’s balance sheet. 

Like a banking organization’s size, offbalance sheet exposure provides a 

measure of the extent to which 

customers or counterparties may be 

exposed to a risk of loss or suffer a 

disruption in the provision of services. 

In addition, off-balance sheet exposure 

can lead to significant future draws on 

capital and liquidity, particularly in 

times of stress. In the financial crisis, for 

example, vulnerabilities at individual 

banking organizations were exacerbated 

by margin calls on derivative exposures, 

calls on commitments, and support 

provided to sponsored funds. These 

exposures can be a source of safety and 

soundness risk, as banking 

organizations with significant offbalance sheet exposure may have to 

fund these positions in the market in a 

time of stress, which can put a strain on 

both capital and liquidity. The nature of 

these risks for banking organizations of 

this size and complexity can also lead 

to financial stability risk, as they can 

manifest rapidly and with less 

transparency to other market 

participants. In addition, because draws 

on off-balance sheet exposures such as 

committed credit and liquidity facilities 

tend to increase in times of stress, they 

can exacerbate the effects of stress on a 

banking organization.35

Off-balance sheet exposures may also 

serve as a measure of a banking 

organization’s interconnectedness. 

Some off-balance sheet exposures, such 

as derivatives, are concentrated among 

the largest financial firms.36 The distress 

or failure of one party to a financial 

contract, such as a derivative or 

securities financing transaction, can 

trigger disruptive terminations of these 

contracts that destabilize the defaulting 

party’s otherwise solvent affiliates.37

Such a default also can lead to 

disruptions in markets for financial 

contracts, including by resulting in 

rapid market-wide unwinding of trading 

positions.38 In this way, the effects of 

one party’s failure or distress can be 

amplified by its off-balance sheet 

connections with other financial market 

participants. 

The proposal would define offbalance sheet exposure based on 

measures currently reported by holding 

companies with more than $100 billion 

in assets, specifically, as total exposure, 

as defined on FR Y–15, minus total 

consolidated assets, as reported on the 

Consolidated Financial Statements for 

Holding Companies (FR Y–9C). Total 

exposure includes a banking 

organization’s on-balance sheet assets 

plus certain off-balance sheet exposures, 

including derivative exposures, repostyle transactions, and other off-balance 

sheet exposures (such as commitments). 

Question 5: What are the advantages 

and disadvantages of the proposed riskbased indicators? What different 

indicators should the agencies use, and 

why? 

Question 6: At what level should the 

threshold for each indicator be set, and 

why? Commenters are encouraged to 

provide data supporting their 

recommendations. 

Question 7: The agencies are 

considering whether Category II 

standards should apply based on a 

banking organization’s weighted shortterm wholesale funding, nonbank 

assets, and off-balance sheet exposure, 

using a higher threshold than the $75 

billion that would apply for Category III 

standards, in addition to the thresholds 

discussed above based on asset size and 

cross-jurisdictional activity. For 

example, a banking organization could 

be subject to Category II standards if one 

or more of these indicators equaled or 

exceeded a level such as $100 billion or 

$200 billion. A threshold of $200 billion 

would represent at least 30 percent and 

as much as 80 percent of total 

consolidated assets for banking 

organizations with between $250 billion 

and $700 billion in total consolidated 

assets. If the agencies were to adopt 

additional indicators for purposes of 

identifying banking organizations that 

should be subject to Category II 

standards, at what level should the 

threshold for each indicator be set, and 

why? Commenters are encouraged to 

provide data supporting their 

recommendations. 


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39See 12 CFR part 217, subpart H. 

40For more discussion relating to the scoring 

methodology, please see the Board’s final rule 

establishing the scoring methodology. See 

Regulatory Capital Rules: Implementation of RiskBased Capital Surcharges for Global Systemically 

Important Bank Holding Companies, 80 FR 49082 

(Aug. 14, 2015). 

41See 12 U.S.C. 5365(a)(2)(A). 

42 In conducting its analysis, the Board 

considered method 1 and method 2 scores as of 

December 31, 2017. Consistent with the thresholds 

in EGRRCPA, the Board considered the scores of 

bank holding companies and covered savings and 

loan holding companies with total consolidated 

assets of $100 billion or more but less than $250 

billion, $250 billion or more that are not GSIBs, and 

GSIBs. 

43Outliers can be determined by a number of 

statistical methods. For these purposes, the Board 

computed an outlier as the third quartile plus three 

times the interquartile range of method 1 and 

method 2 scores of these U.S. bank holding 

companies and covered savings and loan holding 

companies. 

3. Alternative Scoping Criteria 

An alternative approach for assessing 

the risk profile and systemic footprint of 

a banking organization for purposes of 

tailoring prudential standards would be 

to use a single, comprehensive score. 

The Board uses a GSIB identification 

methodology (scoring methodology) to 

identify global systemically important 

bank holding companies and apply riskbased capital surcharges to these 

banking organizations. The agencies 

could use this same scoring 

methodology to tailor prudential 

standards for large, but not globally 

systemic, banking organizations. 

The scoring methodology calculates a 

GSIB’s capital surcharge under two 

methods.39 The first method is based on 

the sum of a firm’s systemic indicator 

scores reflecting its size, 

interconnectedness, cross-jurisdictional 

activity, substitutability, and complexity 

(method 1). The second method is based 

on the sum of these same measures of 

risk, except that the substitutability 

measures are replaced with a measure of 

the firm’s reliance on short-term 

wholesale funding (method 2).40

The Board designed the scoring 

methodology to provide a single, 

comprehensive, integrated assessment 

of a large bank holding company’s 

systemic footprint. Accordingly, the 

indicators in the scoring methodology 

measure the extent to which the failure 

or distress of a bank holding company 

could pose a threat to financial stability 

or inflict material damage on the 

broader economy. The indicators used 

in the scoring methodology also could 

be used to help identify banking 

organizations that have heightened risk 

profiles and would closely align with 

the risk-based factors specified in 

section 165 of the Dodd-Frank Act for 

applying enhanced prudential standards 

and differentiating among banking 

organizations to which the enhanced 

prudential standards apply.41

Importantly, large bank holding 

companies already submit to the Board 

periodic public reports on their 

indicator scores in the scoring 

methodology. Accordingly, use of the 

scoring methodology more broadly for 

tailoring of prudential standards would 

promote transparency and would 

economize on compliance costs for large 

bank holding companies. 

Under the alternative scoring 

approach, a banking organization’s size 

and either its method 1 or method 2 

score from the scoring methodology 

would be used to determine which 

category of standards would apply to 

the firm. In light of the changes made by 

EGRRCPA, the Board conducted an 

analysis of the distribution of method 1 

and method 2 scores of bank holding 

companies and covered savings and 

loan holding companies with at least 

$100 billion in total assets.42

Category I: As under the proposal and 

under the Board’s existing enhanced 

prudential standards framework, 

Category I standards would continue to 

apply to U.S. GSIBs, which would 

continue to be defined as U.S. banking 

organizations with a method 1 score of 

130 or more. 

Category II: Category II banking 

organizations are defined in the 

proposal as those whose failure or 

distress could impose costs on the U.S. 

financial system and economy that are 

higher than the costs imposed by the 

failure or distress of an average banking 

organization with total consolidated 

assets of $250 billion or more. 

In selecting the ranges of method 1 or 

method 2 scores that could define the 

application of Category II standards, the 

Board considered the potential of a 

firm’s material distress or failure to 

disrupt the U.S. financial system or 

economy. As noted in section II.B.1 of 

this Supplementary Information section, 

during the financial crisis, significant 

losses at Wachovia Corporation, which 

had $780 billion in total consolidated 

assets at the time of being acquired in 

distress, had a destabilizing effect on the 

financial system. The Board estimated 

method 1 and method 2 scores for 

Wachovia Corporation, based on 

available data, and also calculated the 

scores of banking organizations with 

more than $250 billion in total 

consolidated assets that are not U.S. 

GSIBs assuming that each had $700 

billion in total consolidated assets (the 

asset size threshold used to define 

Category II in the agencies’ main 

proposal). The Board also considered 

the outlier method 1 and method 2 

scores for banking organizations with 

more than $250 billion in total 

consolidated assets that are not U.S. 

GSIBs.43

Based on this analysis, the agencies 

would apply Category II standards to 

any non-GSIB banking organization 

with at least $100 billion in total 

consolidated assets and with a method 

1 score between 60 and 80 or a method 

2 score between 100 to 150. If the 

agencies adopt a final rule that uses the 

scoring methodology to establish 

tailoring thresholds, the agencies would 

set a single score within the listed 

ranges for application of Category II 

standards. The agencies invite comment 

on what score within these ranges 

would be appropriate. 

Category III: As noted, section 165 of 

the Dodd-Frank Act requires the Board 

to apply enhanced prudential standards 

to any bank holding company with total 

consolidated assets of $250 billion or 

more and authorizes the Board to apply 

these standards to bank holding 

companies with between $100 billion 

and $250 billion in total consolidated 

assets if the Board makes certain 

statutory findings. To determine a 

scoring methodology threshold for 

application of Category III standards to 

banking organizations with between 

$100 billion and $250 billion in total 

consolidated assets, the Board 

considered the scores of these banking 

organizations as compared to the scores 

of banking organizations with greater 

than $250 billion in total consolidated 

assets that are not U.S. GSIBs. Based on 

this analysis, the Board determined that, 

under a scoring methodology approach 

to tailoring, Category III standards 

would be applied to banking 

organizations with total consolidated 

assets between $100 billion and $250 

billion that have a method 1 score 

between 25 to 45. Banking organizations 

with a score in this range would have 

a score similar to that of the average 

firm with greater than $250 billion in 

total consolidated assets. Using method 

2 scores, the agencies would apply 

Category III standards to any banking 

organization with total consolidated 

assets between $100 billion and $250 

billion that have a method 2 score 

between 50 to 85. Again, if the agencies 

were to adopt the scoring methodology 

for tailoring in a final rule, the agencies 

would pick a single score within the 

listed ranges. The agencies invite 

comment on what score within these 

ranges would be appropriate. 


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44See, e.g., 12 CFR part 217. 

45With respect to a firm that has reported an 

indicator for less than four quarters, the proposal 

would refer to the average of the most recent quarter 

or quarters. 

46See, e.g., 12 CFR 252.43. 

47The Board would maintain existing transition 

provisions for Category I and II capital standards, 

such as changes to a bank holding company’s GSIB 

surcharge. 

48 12 CFR 50.1(b)(2) (OCC); 12 CFR 249.1(b)(2) 

(Board); 12 CFR 329(1)(b)(2) (FDIC); and NSFR 

proposed rule. See also Liquidity Coverage Ratio: 

Liquidity Risk Measurement Standards, 79 FR 

61440, 61447 (October 10, 2014). 

49See id. 

Category IV: Under a score-based 

approach, category IV standards would 

apply to banking organizations with at 

least $100 billion in total assets that do 

not meet any of the thresholds specified 

for Categories I through III (that is, a 

method 1 score of less than 25 to 45 or 

a method 2 score of less than 50 to 85). 

Question 8: What are the advantages 

and disadvantages to using the scoring 

methodology and category thresholds 

described above relative to the proposed 

thresholds? 

Question 9: If the agencies were to use 

the scoring methodology to differentiate 

non-GSIB banking organizations for 

purposes of tailoring prudential 

standards, should the agencies use 

method 1 scores, method 2 scores, or 

both? 

Question 10: If the agencies adopt the 

scoring methodology, what would be the 

advantages or disadvantages of the 

agencies requiring banking 

organizations to calculate their scores at 

a frequency greater than annually, 

including, for example, requiring a 

banking organization to calculate its 

score on a quarterly basis? 

Question 11: With respect to each 

category of banking organization 

described above, at what level should 

the method 1 or method 2 score 

thresholds be set and why, and discuss 

how those levels could be impacted by 

considering additional data, or by 

considering possible changes in the 

banking system. Commenters are 

encouraged to provide data supporting 

their recommendations. 

Question 12: What are the advantages 

and disadvantages in using the scoring 

methodology to categorize banking 

organizations with systemic footprints 

smaller than the GSIBs for purposes of 

tailoring prudential standards? 

Question 13: What other approaches 

should the agencies consider in setting 

thresholds for tailored prudential 

standards? 

4. Determination of Applicable Category 

of Standards 

Under the proposal, a holding 

company with total consolidated assets 

of $100 billion or more and its 

subsidiary depository institutions 

would be required to determine the 

category of standards to which it is 

subject. The proposal would add certain 

defined terms to the agencies’ capital 

rule and LCR rule to implement the 

proposed categories. U.S. GSIBs would 

continue to be identified using the 

Board’s GSIB surcharge methodology, 

and the proposal would refer to these 

banking organizations as global 

systemically important bank holding 

companies, consistent with the term 

used elsewhere in the agencies’ 

regulations.44 The proposal would also 

add defined terms for banking 

organizations subject to Category II, III, 

or IV standards as Category II banking 

organizations, Category III banking 

organizations, or Category IV banking 

organizations, respectively. 

Banking organizations that would be 

subject to the proposal would be 

required to report size and other riskbased indicators on a quarterly basis. In 

order to capture significant changes in 

a banking organization’s risk profile, 

rather than temporary fluctuations, a 

category of standards would apply to a 

banking organization based on the 

average levels of each indicator over the 

preceding four calendar quarters.45 A 

banking organization would remain 

subject to a category of standards until 

the banking organization no longer 

meets the indicators for its current 

category in each of the four most recent 

calendar quarters, or until the banking 

organization meets the criteria for 

another category of standards based on 

an increase in the average value of one 

or more indicators over the preceding 

four calendar quarters. This approach 

would be consistent with the existing 

applicability and cessation requirements 

of the Board’s enhanced prudential 

standards rule.46 Changes in 

requirements that result from a change 

in category generally would take effect 

on the first day of the second quarter 

following the change in the banking 

organization’s category.47 For example, 

a banking organization that changes 

from Category IV to Category III based 

on an increase in the average value of 

its indicators over the first, second, 

third, and fourth quarters of a calendar 

year would be subject to Category III 

standards beginning on April 1 (the first 

day of the second quarter) of the 

following year. 

Under the LCR rule and NSFR 

proposed rule, a banking organization 

that meets the thresholds for 

applicability measured as of the yearend must comply with the 

requirement(s) beginning on April 1 of 

the following year, or as specified by the 

appropriate agency.48 Under the 

proposal, a banking organization that 

becomes subject to the LCR rule or 

proposed NSFR rule would be required 

to comply with these requirements on 

the first day of the second quarter after 

the banking organization became subject 

to these requirements, consistent with 

the amount of time currently provided 

under the LCR rule and proposed NSFR 

rule after the year-end measurement 

date. 

In addition, the LCR rule provides 

newly covered banking organizations 

with a transition period for the daily 

calculation requirement, recognizing 

that a daily calculation requirement 

could impose significant operational 

and technology demands. Specifically, a 

newly covered banking organization 

must calculate its LCR monthly from 

April 1 to December 1 of its first year 

of compliance. Beginning on January 1 

of the following year, the banking 

organization must calculate its LCR 

daily.49 The proposal would maintain 

this transition period of three calendar 

quarters following initial applicability 

of the LCR requirement. 

The agencies are not proposing 

changes to the cessation provisions of 

the LCR rule, NSFR proposed rule, and 

advanced approaches capital 

requirements. Once a banking 

organization is subject to advanced 

approaches capital requirements, the 

LCR rule, or the NSFR proposed rule, it 

would remain subject to the rule until 

its primary federal supervisor 

determines that application of the rule 

would not be appropriate in light of the 

banking organization’s asset size, level 

of complexity, risk profile, or scope of 

operations. 

Question 14: What are the advantages 

and disadvantages to a banking 

organization calculating its category on 

a quarterly basis? Discuss whether 

calculation on an annual basis would be 

more appropriate and why. 

Question 15: What are the advantages 

and disadvantages of the proposed 

transition period for each of the 

standards in each of the categories? 

What would be the advantages or 

disadvantages of providing additional 

time to conform to new requirements? If 

a banking organization changes 

category because of an increase in one 

or more risk-based indicators, discuss 

the advantages and disadvantages of 

providing an additional quarter before 

applying the new category’s standards. 

Question 16: As noted above, the LCR 

rule currently provides that a banking 

organization becomes subject to the LCR 


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66034 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

50The full requirements of the LCR rule include 

the calculation of the LCR on each business day and 

the inclusion of a maturity mismatch add-on in the 

total net cash outflow amount. 

rule ‘‘beginning on April 1 of the year 

in which the [banking organization] 

becomes subject to the minimum 

liquidity standard.’’ If the applicability 

of the LCR rule is amended to be based 

on a four-quarter average of indicators, 

what would be the advantages and 

disadvantages of removing this 

transition mechanism? What would be 

the advantages and disadvantages of 

requiring a banking organization to 

comply with the LCR and proposed 

NSFR requirements in the quarter 

following the quarter when it exceeds 

the applicability thresholds? 

Question 17: What would be the 

advantages and disadvantages of 

maintaining the cessation provisions in 

the advanced approaches rule, LCR 

rule, and NSFR proposed rule? What 

would be the advantages and 

disadvantages of aligning the cessation 

provisions in the advanced approaches 

capital requirements, LCR rule, and 

NSFR proposed rule with the transition 

provisions between categories of 

standards? For example, the current 

version of the LCR rule provides that, 

once a banking organization becomes 

subject to the LCR rule, it remains 

subject to the LCR rule until its regulator 

determines in writing that application of 

the LCR rule is no longer appropriate. 

What are the advantages and 

disadvantages of requiring a written 

determination before a banking 

organization can move to a lower 

category? What would be the advantages 

and disadvantages of automatically 

moving the category of a banking 

organization based on its size and 

indicators? 

C. Proposed Regulatory Framework 

This section describes the capital and 

liquidity requirements that currently 

apply and those that would apply under 

the four categories in the proposal. 

Similar to certain aspects of the current 

capital requirements, the proposal 

would allow banking organizations to 

choose to apply the more stringent 

requirements of another category (e.g., a 

banking organization subject to Category 

III standards could choose to comply 

with the more stringent Category II 

standards to minimize compliance costs 

across multiple jurisdictions). 

1. Category I Standards 

Currently, U.S. GSIBs are subject to 

the most stringent prudential standards 

relative to other banking organizations, 

which reflect the heightened risks these 

banking organizations pose to U.S. 

financial stability. The proposal would 

make no changes to the capital and 

liquidity requirements applicable to 

U.S. GSIBs. 

Accordingly, U.S. GSIBs would 

remain subject to the most stringent 

capital and liquidity requirements, 

including requirements based on 

standards developed by the BCBS, 

subject to notice and comment 

rulemaking in the United States. Their 

subsidiary depository institutions 

would also be subject to the most 

stringent requirements, as applicable. 

Category I capital standards would 

include a requirement to calculate riskbased capital ratios using both the 

advanced approaches and the 

standardized approach; the U.S. 

leverage ratio; the enhanced 

supplementary leverage ratio; the GSIB 

surcharge (at the holding company level 

only); the requirement to recognize most 

elements of AOCI in regulatory capital; 

and the requirement to expand their 

capital conservation buffer by the 

amount of the countercyclical capital 

buffer, if applicable. Category I liquidity 

standards would include the full LCR 

requirement 50 and proposed NSFR 

requirement. These standards would 

continue to strengthen the capital and 

liquidity positions of U.S. GSIBs based 

on their significant risk profiles, to 

improve their resiliency and ability to 

provide consistent financial 

intermediation across market and 

economic conditions, and to reduce 

risks to U.S. financial stability. 

Consistent with current requirements, 

a subsidiary depository institution of a 

banking organization subject to the full 

LCR and proposed NSFR requirements 

with $10 billion or more in total 

consolidated assets would be required 

to meet the LCR and NSFR 

requirements. Currently, the $10 billion 

consolidated asset threshold is 

measured based on the most recent yearend Consolidated Report of Condition 

and Income. Consistent with the other 

proposed scoping criteria described in 

section II.B of this Supplementary 

Information section, the proposal would 

amend the LCR and proposed NSFR 

rules to measure this threshold based on 

the value of total consolidated assets 

over the four most recent calendar 

quarters. 

2. Category II Standards 

The failure or distress of banking 

organizations that would be subject to 

Category II standards could impose 

significant costs on the U.S. financial 

system and economy, although they 

generally do not present the same 

degree of risk as U.S. GSIBs. Their size 

and cross-jurisdictional activity present 

risks that require enhanced regulatory 

capital standards and greater 

supervisory oversight relative to other 

banking organizations. Further, size and 

cross-jurisdictional activity can present 

particularly heightened challenges in 

the case of a liquidity stress, which can 

create both financial stability and safety 

and soundness risks. For example, a 

very large banking organization that 

engages in asset fire sales to meet shortterm liquidity needs is more likely to 

transmit distress on a broader scale 

because of the greater volume of assets 

it could sell in a short period of time. 

Similarly, a banking organization with 

significant international activity may be 

more exposed to the risk of ring-fencing 

of liquidity resources by one or more 

jurisdictions that could impede its 

ability to move liquidity to meet 

outflows. 

In this proposal, capital and liquidity 

requirements that are generally 

consistent with standards developed by 

the BCBS, subject to notice and 

comment rulemaking in the United 

States, would continue to apply to 

holding companies subject to Category II 

standards. These standards would 

include the full LCR and proposed 

NSFR requirements, advanced 

approaches capital requirements, and 

the supplementary leverage ratio. 

Similar to Category I standards, holding 

companies subject to Category II 

standards would also be required to 

recognize most elements of AOCI in 

regulatory capital. Reflecting AOCI in 

regulatory capital results in a more 

accurate measure of capital, which is 

important for maintaining the resilience 

of these banking organizations. 

Additionally, holding companies 

subject to Category II standards would 

be required to expand their capital 

conservation buffer by the amount of the 

countercyclical capital buffer, if 

applicable. 

As under existing requirements, the 

proposed Category II capital standards 

would apply to the subsidiary 

depository institutions of holding 

companies subject to Category II 

standards, and the LCR and proposed 

NSFR requirements would apply to 

subsidiary depository institutions with 

total consolidated assets of $10 billion 

or more. 

3. Category III Standards 

The agencies’ current regulatory 

framework generally applies the same 

capital and liquidity standards to all 

non-GSIB banking organizations with 

$250 billion or more in total 

consolidated assets. For example, 

advanced approaches capital 


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requirements, the supplementary 

leverage ratio, and the LCR requirement 

generally apply to banking organizations 

with $250 billion or more in total 

consolidated assets or $10 billion or 

more in foreign exposure. The proposed 

framework would differentiate among 

banking organizations with $250 billion 

or more in total consolidated assets. In 

particular, Categories I and II would 

include requirements generally 

consistent with standards developed by 

the BCBS, subject to notice and 

comment rulemaking in the United 

States, whereas Category III would 

include fewer such standards, based on 

the relatively lower risk profiles and 

lesser degree of cross-border activity of 

subject banking organizations. In 

particular, the agencies are proposing 

not to apply advanced approaches 

capital requirements and the 

requirement to recognize most elements 

of AOCI in regulatory capital to banking 

organizations subject to Category III 

(and Category IV) standards. However, 

Category III standards would also reflect 

the elevated risk profile of these banking 

organizations relative to smaller and 

less complex banking organizations. 

Category III standards would apply to 

all banking organizations with at least 

$250 billion in total consolidated assets 

that do not meet the criteria for Category 

I or Category II, as well as to certain 

banking organizations with less than 

$250 billion in total consolidated assets 

based on their risk profile. As discussed 

in section II.B.2 of this Supplementary 

Information section, weighted shortterm wholesale funding, nonbank assets, 

and off-balance sheet exposure 

indicators contribute to the systemic 

risk profile and safety and soundness 

risk profile of banking organizations. 

Under the proposal, Category III 

capital standards would include 

generally applicable risk-based capital 

requirements, the U.S. leverage ratio, 

and the supplementary leverage ratio. 

Category III standards would also 

include the countercyclical capital 

buffer, given these banking 

organizations’ significant role in 

financial intermediation in the United 

States individually and as a group. 

These banking organizations have a 

substantial enough footprint that they 

should expand their capital 

conservation buffer as necessary to 

support the prudential goals of the 

buffer framework. The supplementary 

leverage ratio would apply to banking 

organizations subject to Category III 

standards given these banking 

organizations’ size and risk profile. For 

example, firms subject to Category III 

standards include banking organizations 

with material off-balance sheet 

exposures that are not accounted for in 

the traditional U.S. tier 1 leverage ratio. 

The supplementary leverage ratio is 

important for these banking 

organizations to constrain the build-up 

of off-balance sheet exposures, which 

can contribute to instability and 

undermine safety and soundness of 

individual banking organizations. 

The agencies are separately proposing 

to adopt the standardized approach for 

counterparty credit risk for derivatives 

exposures (SA–CCR) and to require 

advanced approaches banking 

organizations (banking organizations 

subject to Category I or II standards, 

under this proposal) to use SA–CCR for 

calculating their risk-based capital ratios 

and a modified version of SA–CCR for 

calculating total leverage exposure 

under the supplementary leverage ratio. 

If that proposal were to be adopted, the 

agencies would allow a Category III 

banking organization to elect to use SA– 

CCR for calculating derivatives exposure 

in connection with its risk-based capital 

ratios, consistent with the SA–CCR 

proposal. Furthermore, if that proposal 

were to be adopted, the agencies intend 

to allow a banking organization subject 

to Category III standards to elect to use 

SA–CCR for calculating its total leverage 

exposure calculations used to determine 

the supplementary leverage ratio, or to 

continue to use the current exposure 

method. 

Banking organizations subject to 

Category III standards would not be 

required to apply advanced approaches 

capital requirements. The models for 

applying these requirements are costly 

to build and maintain, and the agencies 

do not expect that the removal of these 

requirements would materially change 

the amount of capital that these banking 

organizations would be required to 

maintain. The standardized approach 

currently represents the binding riskbased capital constraint for all banking 

organizations in the current population 

of banking organizations that would be 

subject to Category III standards. 

Question 18: Under the current 

capital rule, the agencies apply certain 

provisions, such as the supplementary 

leverage ratio and countercyclical 

capital buffer, based on the same 

applicability thresholds as advanced 

approaches capital requirements. The 

proposal would establish different 

applicability thresholds for the 

supplementary leverage ratio and 

countercyclical capital buffer by 

including them as Category III 

standards, while advanced approaches 

capital requirements would apply only 

as Category I and II standards. This 

approach would increase the risksensitivity of the framework and allow 

for the retention of key elements of the 

capital rule for banking organizations 

subject to Category III standards without 

requiring them to comply with advanced 

approaches capital requirements more 

broadly. However, it also increases the 

complexity of the capital rule. To what 

extent, if any, would this additional 

complexity increase compliance costs 

for large banking organizations (for 

example, by requiring banking 

organizations to monitor and manage 

the proposed risk-based indicator 

thresholds)? To what extent, if any, 

would the proposed approach add 

complexity for market participants 

when comparing the capital adequacy 

of banking organizations in different 

categories? The agencies request 

comment on the advantages and 

disadvantages of establishing separate 

regulatory capital standards for banking 

organizations that would be subject to 

Category III that are different from 

either Category II or IV standards, 

including any wider implications for 

financial stability. 

Question 19: What are the advantages 

and disadvantages of applying the 

supplementary leverage ratio 

requirement to banking organizations 

subject to Category III standards? How 

do these advantages and disadvantages 

compare to any costs associated with 

any additional complexity to the 

regulatory framework that would result 

from applying this to banking 

organizations subject to Category III 

standards? To what extent would 

application of the supplementary 

leverage ratio requirement to these 

banking organizations strengthen their 

safety and soundness and improve U.S. 

financial stability? 

Question 20: What are the advantages 

and disadvantages of not requiring 

banking organizations subject to 

Category III standards to recognize most 

elements of AOCI in regulatory capital? 

To what extent does not requiring 

banking organizations subject to 

Category III standards to recognize most 

elements of AOCI in regulatory capital 

impact safety and soundness of 

individual banking organizations or 

raise broader financial stability 

concerns? For example, to what extent 

would this approach reduce the 

accuracy of these banking 

organizations’ reported regulatory 

capital? To what extent does the 

recognition of most elements of AOCI in 

regulatory capital improve market 

discipline and provide for a clearer 

picture of the financial health of 

banking organizations? To what extent 

does it make comparing the financial 

condition of Category III banking 

organizations to that of Category I and 


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66036 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

51Section 30 of the LCR rule requires a banking 

organization, as applicable, to include in its total 

net cash outflow amount a maturity mismatch addon, which is calculated as the difference (if greater 

than zero) between the covered company’s largest 

net cumulative maturity outflow amount for any of 

the 30 calendar days following the calculation date 

and the net day 30 cumulative maturity outflow 

amount. 

52As discussed in section II.B.4 of this 

Supplementary Information section, the proposal 

would measure the total consolidated assets of a 

subsidiary depository institution based on the level 

over the previous four calendar quarters. 

53 In the case of a depository institution that is not 

a consolidated subsidiary of a banking organization 

that would be subject to Category I, II, III, or IV 

standards or a consolidated subsidiary of a foreign 

Category II banking organizations, on 

the one hand, and that of Category IV 

banking organizations, on the other 

hand, more difficult? 

Question 21: With respect to banking 

organizations that currently recognize 

most elements of AOCI in regulatory 

capital, to what extent do intra-quarter 

variations in regulatory capital due to 

the inclusion of AOCI since the capital 

rule took effect differ from variations in 

reported quarter-end data over the same 

period? What have been the causes of 

variations in each? 

Question 22: As discussed above, the 

agencies are not requiring banking 

organizations subject to Category III 

standards to recognize most elements of 

AOCI in regulatory capital. 

Alternatively, the agencies could require 

only the top-tier parent holding 

company to recognize most elements of 

AOCI in regulatory capital while 

exempting their subsidiary depository 

institutions from this requirement. What 

are the advantages and disadvantages of 

this alternative approach? What would 

be the costs and operational challenges 

associated with this additional 

complexity, where the holding company 

and subsidiary depository institutions 

implement different standards related to 

AOCI? To what degree would this 

alternative approach to AOCI impose 

less cost or burden to banking 

organizations subject to Category III 

standards relative to their current AOCI 

requirement under the agencies’ capital 

rule (i.e., both the top-tier holding 

company and subsidiary depository 

institutions are currently required to 

recognize most elements of AOCI in 

regulatory capital)? To what degree 

would this alternative approach provide 

market participants with a transparent 

picture of the financial condition of the 

subsidiary depository institutions and 

the parent holding company? 

Question 23: For purposes of 

comparability, in a final rulemaking 

should the agencies require all banking 

organizations subject to Category III 

standards to use SA–CCR for either riskbased or supplementary leverage ratio 

calculations and, if so, why? 

Question 24: What would be the 

advantages and disadvantages of no 

longer applying the countercyclical 

capital buffer to banking organizations 

that would be subject to Category III 

standards? In particular, how would 

narrowing the scope of application of 

the countercyclical buffer affect the 

financial stability and countercyclical 

objectives of the buffer? What other 

regulatory tools, if any, could be used to 

meet these objectives? 

Question 25: The proposal would 

apply Category III standards to a 

banking organization that exceeds 

certain risk-based indicators, including 

having more than $75 billion in offbalance sheet exposures. In light of the 

inclusion of off-balance sheet exposures 

as a threshold for Category III 

standards, discuss the advantages and 

disadvantages of including the 

supplementary leverage ratio as a 

Category III standard. 

With respect to liquidity 

requirements, the LCR rule and 

proposed NSFR rule provide 

standardized minimum liquidity 

requirements and measures of liquidity 

risk that enhance banking organizations’ 

resiliency, improve risk management, 

and facilitate comparisons of liquidity 

risk across banking organizations. These 

standards are designed to achieve two 

separate but complementary objectives. 

The LCR rule promotes the resilience of 

a banking organization to liquidity risk 

by ensuring that it has sufficient liquid 

assets to survive a short-term period of 

stress. The proposed NSFR rule would 

address funding risks over a longer, oneyear time horizon and mitigate the risk 

of disruptions to a banking 

organization’s regular sources of 

funding by requiring banking 

organizations to maintain a stable 

funding profile. 

Category III standards would include 

full or reduced LCR and NSFR 

requirements, depending on a banking 

organization’s level of weighted shortterm wholesale funding. Specifically, a 

banking organization that meets the 

criteria for Category III standards would 

be subject to the full LCR and NSFR 

requirements if it has weighted shortterm wholesale funding of $75 billion or 

more, or would be subject to less 

stringent, reduced LCR and NSFR 

requirements if it has less than $75 

billion in weighted short-term 

wholesale funding. 

For banking organizations subject to 

Category III standards with weighted 

short-term wholesale funding of less 

than $75 billion, the agencies are 

proposing to reduce the stringency of 

the LCR and NSFR requirements and 

request comment regarding the 

appropriate level. These banking 

organizations would be subject to 

reduced LCR and NSFR requirements, 

as they have less reliance on short-term 

wholesale funding that is a source of 

liquidity risk. While the failure or 

distress of such a firm could pose risks 

to U.S. financial stability, their risk 

profile is lower than that of U.S. GSIBs 

and they are smaller or face a lesser 

degree of cross-border challenges than 

firms that would be subject to Category 

II standards. In addition, although the 

proposal would reduce the standardized 

LCR and NSFR requirements for these 

banking organizations, under the Boardonly proposal, depository institution 

holding companies subject to Category 

III standards would be required to 

comply with liquidity risk management, 

stress testing, and buffer requirements, 

which reflect the firm’s individual risk 

profile. 

The denominator of the proposed 

reduced LCR would equal the net cash 

outflows calculated under the full LCR 

requirement, multiplied by a factor that 

reduces its stringency. Similarly, the 

denominator of the NSFR would equal 

the required stable funding requirement 

calculated under the full NSFR 

requirement, multiplied by a factor that 

reduces its stringency. The agencies are 

requesting comment on applying 

reduced standards that would be 

equivalent to between 70 and 85 percent 

of the full LCR and NSFR requirements. 

The proposal would not alter other 

aspects of the LCR and NSFR 

calculations for these banking 

organizations, relative to the full LCR 

and proposed NSFR requirements. For 

example, these banking organizations 

would continue to calculate their LCR 

on each business day and include the 

maturity mismatch add-on in the 

calculation.51

Like the current LCR and NSFR 

requirements, the proposal would apply 

Category III LCR and NSFR 

requirements to a depository institution 

that has total consolidated assets of $10 

billion or more and is a consolidated 

subsidiary of a company subject to 

Category III standards.52 The level of the 

LCR and NSFR requirements applicable 

to the subsidiary depository institution 

would be the same as the level that 

would apply to the parent banking 

organization. For example, a subsidiary 

depository institution with $10 billion 

in total consolidated assets of a banking 

organization subject to the reduced LCR 

and NSFR requirements under Category 

III standards would also be subject to 

the reduced LCR and NSFR 

requirement.53


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banking organization, the applicable category of 

standards would depend on the risk-based 

indicators of the depository institution. For 

example, if the depository institution meets the 

criteria for Category III standards but has weighted 

short-term wholesale funding of less than $75 

billion, the depository institution would be subject 

to the proposed reduced LCR and NSFR 

requirements. 

54See §ll.22(b)(3) and (4) of the LCR rule (12 

CFR 50.22(b)(3) and (4) (OCC); 12 CFR 249.22(b)(3) 

and (4) (Board); 12 CFR 329.22(b)(3) and (4) (FDIC). 

55See NSFR proposed rule §ll.108. 

56The proposal would also remove the modified 

LCR and proposed modified NSFR requirements for 

banking organizations with total consolidated assets 

less than $100 billion. As previously noted, the 

Board plans to develop a separate proposal relating 

to foreign banking organizations. Accordingly, the 

proposal would maintain the current full and 

modified LCR requirements, as applicable, for 

banking organizations that are consolidated 

subsidiaries of a foreign banking organization until 

such time as the Board adopts a final rule to amend 

the requirements for these banking organizations. 

Question 26: In general, the proposed 

framework would apply consistent 

requirements to all banking 

organizations within each category of 

standards. For the LCR and proposed 

NSFR requirements, however, the 

agencies are proposing two levels of 

standards within Category III. 

Specifically, the proposal would apply 

reduced LCR and NSFR requirements to 

a banking organization subject to 

Category III standards that has less than 

$75 billion in weighted short-term 

wholesale funding and that is not a 

subsidiary of a banking organization 

subject to the full LCR or proposed 

NSFR requirements. This additional 

degree of tailoring is intended to reflect 

considerations specific to liquidity risk, 

and would allow further differentiation 

within Category III to accommodate 

reduced requirements for banking 

organizations with lesser liquidity risk 

profiles. However, this additional risksensitivity would also increase the 

complexity of the proposed framework. 

The agencies request comment 

regarding this proposed trade-off. In 

particular, what do commenters believe 

would be the advantages and 

disadvantages of this additional degree 

of differentiation for purposes of 

determining the level of LCR and NSFR 

requirements? What costs, if any, would 

this additional degree of complexity 

create for large banking organizations? 

What alternatives should the agencies 

consider to the proposed approach that 

would maintain strong standardized 

liquidity requirements for large banking 

organizations with significant liquidity 

risk exposures that do not meet the 

proposed criteria for application of 

Category I or Category II standards? 

What other risk-based indicators, 

besides short-term wholesale funding, 

should the agencies consider in 

prescribing the liquidity requirements 

under the proposal, and why? What 

would be the advantages or 

disadvantages of requiring all Category 

III banking organizations to meet the 

full LCR and NSFR requirements? 

Similarly, what would be the advantages 

or disadvantages of requiring all 

Category III banking organizations to 

meet the reduced LCR and NSFR 

requirements? 

Question 27: Between a range of 70 

and 85 percent of the full requirements, 

what level should the agencies adopt for 

the reduced LCR and NSFR 

requirements for banking organizations 

subject to Category III standards that 

have less than $75 billion in weighted 

short-term wholesale funding, and why? 

Consistent with section 22(b) of the 

LCR rule, a banking organization subject 

to the proposed reduced LCR 

requirement would not be permitted to 

include in its HQLA amount eligible 

HQLA of a consolidated subsidiary 

except up to the amount of the net cash 

outflows of the subsidiary (as adjusted 

for the factor reducing the stringency of 

the requirement), plus any additional 

amount of assets, including proceeds 

from the monetization of assets, that 

would be available for transfer to the 

top-tier covered company during times 

of stress without statutory, regulatory, 

contractual, or supervisory 

restrictions.54 A similar restriction 

would apply under section 108 of the 

NSFR proposed rule.55

Question 28: The agencies request 

comment regarding this proposed 

approach, as well as potential 

alternative approaches to recognizing 

restrictions on the transferability of 

liquidity from a consolidated subsidiary 

to the top-tier covered company. What 

alternative approaches should the 

agencies consider? 

For example, should the agencies 

consider the approach the Board 

currently permits for holding companies 

subject to a modified LCR requirement? 

Under this approach, a company may 

include in its HQLA amount eligible 

HQLA held at a subsidiary up to 100 

percent of the net cash outflows of the 

subsidiary, plus amounts that may be 

transferred without restriction to the 

top-tier covered company. In the case of 

the NSFR proposed rule, a company 

could include available stable funding 

amounts of the subsidiary up to 100 

percent of the required stable funding 

amount of the subsidiary, plus amounts 

that may be transferred without 

restriction to the top-tier covered 

company. What would be the 

advantages and disadvantages of the 

proposed approach and potential 

alternatives? What incentives would 

each have with respect to the 

positioning of HQLA within a banking 

organization? What effects would the 

proposed approach or alternative 

approaches have on the safety and 

soundness of a holding company and its 

subsidiary depository institutions? 

4. Category IV Standards 

Under the proposal, Category IV 

standards would apply to banking 

organizations with $100 billion or more 

in total consolidated assets that do not 

meet the criteria for Categories I, II, or 

III, and their subsidiary depository 

institutions. Relative to current 

requirements, the proposed Category IV 

standards would reduce liquidity and, 

in certain circumstances, capital 

requirements to reflect these banking 

organizations’ lower risk profile and 

lesser degree of complexity relative to 

other large banking organizations. 

Category IV capital standards would 

include the generally applicable riskbased capital requirements and the U.S. 

leverage ratio. The proposal would not 

apply the countercyclical capital buffer 

and the supplementary leverage ratio 

applicable under Category III to 

Category IV banking organizations. In 

this manner, the standards applicable to 

banking organizations subject to 

Category IV would maintain the risksensitivity of the current capital regime 

and resiliency of these banking 

organizations’ capital positions, and 

would recognize that these banking 

organizations, while large, have lower 

indicators of risk relative to their larger 

peers, as set forth in the proposal. As a 

result, and as noted above, banking 

organizations subject to Category IV 

standards would generally have the 

same capital and liquidity regulatory 

requirements as banking organizations 

under $100 billion in total consolidated 

assets. 

Under the proposal, Category IV 

standards would not include an LCR or 

NSFR requirement. As a result, the 

Board is proposing to remove the 

current modified LCR requirement and 

the proposed modified NSFR 

requirement for domestic banking 

organizations.56 The LCR rule and NSFR 

proposed rule are important standards 

for Category I, Category II, and Category 

III given such banking organizations’ 

size, complexity, and the resulting 

challenges that may complicate the 

resolution of such banking 

organizations. However these 

standardized liquidity requirements are 

less important for banking organizations 

subject to Category IV standards given 


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57The Board-only proposal provides further 

discussion of liquidity standards that would apply 

under the Board’s regulations to firms that would 

be subject to Category IV standards. 

58As noted in section IV.D of this Supplementary 

Information, the OCC also considered the potential 

costs of the proposed rule for the purpose of the 

Unfunded Mandates Reform Act of 1996 (2 U.S.C. 

1532). 

59Because the NSFR and modified NSFR 

requirements have not yet been finalized, banking 

organizations are not currently subject to those 

minimum requirements. As a result, the Board did 

not assess any changes in impact as a result of 

amending its scope of application. 

60The Board’s analysis estimates the impact of 

reducing the LCR requirement for holding 

companies that would be subject to Category III or 

Category IV standards using data submitted on the 

FR 2052a and FR Y9–C by these holding companies 

for the 2018Q1 reporting period. 

61For example, in the case of a holding company 

that would be subject to Category III standards and 

the reduced LCR and NSFR requirements under the 

proposal, if the firm’s current LCR requirement is 

greater than its ILST-based liquidity buffer 

requirement, and the firm currently maintains an 

LCR of 120 percent relative to the currently 

applicable full LCR requirement, the approach 

would assume the firm will reduce its HQLA by 30 

percent under a 70 percent LCR requirement. 

62The estimated drop in HQLA, assuming an 85 

percent LCR for holding companies subject to 

Category III standards that have less than $75 

billion in weighted short-term wholesale funding, 

would be approximately $20 billion (or 0.6 percent 

reduction of aggregate HQLA among holding 

companies with $100 billion or more in total 

consolidated assets). 

their smaller systemic footprint, more 

limited size, and other applicable 

requirements. As a class, the domestic 

banking organizations currently in this 

category have more traditional balance 

sheet structures, are largely funded by 

stable deposits, and have little reliance 

on less stable wholesale funding. All 

banking organizations that would be 

subject to Category IV have less than 

$75 billion in weighted short-term 

wholesale funding. Board estimates of 

stable funding for these banking 

organizations indicate they would 

exceed by roughly 40 percent the 

modified 70 percent NSFR requirement 

that would apply under the agencies’ 

NSFR proposed rule. These banking 

organizations would also continue to be 

subject to the internal liquidity stress 

testing requirements at the consolidated 

holding company level under the 

Board’s regulations, which include 30- 

day and 1-year planning horizons, and 

Complex Institution Liquidity 

Monitoring Report (FR 2052a) 

requirements.57 Based on this 

combination of factors, and given the 

compliance and disclosure obligations 

under the LCR rule and proposed NSFR 

rule, the agencies are proposing to no 

longer apply the LCR rule and proposed 

NSFR rule to banking organizations 

subject to Category IV standards. 

Question 29: Based on the risk 

profiles of banking organizations subject 

to Category IV standards, what 

alternative capital and liquidity 

requirements should the agencies 

consider and why? 

Question 30: The proposal would not 

apply the LCR or the proposed NSFR 

rules to banking organizations subject to 

Category IV standards. What are the 

advantages and disadvantages of this 

approach? To what extent would 

scoping out banking organizations 

subject to Category IV standards from 

the LCR and proposed NSFR rules affect 

the safety and soundness of individual 

banking organizations or raise broader 

financial stability concerns? To what 

extent does maintaining liquidity risk 

management and internal liquidity 

stress testing and buffer requirements at 

the holding company level for these 

firms under the Board-only proposal 

mitigate these concerns? What are the 

advantages and disadvantages of 

maintaining standardized liquidity 

requirements, such as the current LCR 

requirement and proposed NSFR 

requirement, for firms subject to 

Category IV standards? If the Board 

were to apply some or all of the LCR and 

proposed NSFR requirements to these 

firms, what, if any, other regulatory 

requirements should the Board consider 

reducing or removing? 

III. Impact Analysis 

The Board assessed the potential 

impact of the proposed rule, taking into 

account potential benefits in the form of 

increased net interest margins from 

holding higher yielding assets, reduced 

compliance costs, and increased 

regulatory flexibility, and potential costs 

related to increased risk to holding 

companies during a period of elevated 

economic stress or market volatility.58

The Board expects the proposal to 

have no material impact on the capital 

levels of banking organizations that 

would be subject to Category I or II 

standards. For banking organizations 

that would be subject to Category III or 

IV standards, the Board expects the 

proposal to slightly lower capital 

requirements under current conditions 

(by approximately $8 billion, or 60 basis 

points of total risk-weighted assets 

among these banking organizations) and 

reduce compliance costs for certain 

banking organizations related to the 

advanced approaches capital 

requirements. The impact on capital 

levels for banking organizations subject 

to Category III and IV standards could 

vary under different economic and 

market conditions. For example, from 

2001 to 2018, the aggregate AOCI for 

banking organizations subject to 

Category III or Category IV standards 

that included AOCI in capital has 

ranged from a decrease of approximately 

140 basis points of total risk-weighted 

assets to an increase of approximately 

50 basis points of total risk-weighted 

assets. 

For purposes of assessing the 

potential impact of the proposed 

changes to the liquidity standards, the 

Board’s assessment focused on the 

impact of the proposed change in the 

applicability and the stringency of the 

Board’s existing liquidity standards 

under the LCR rule.59 The Board 

quantified the impact of the proposed 

LCR tailoring on the HQLA of affected 

holding companies.60 In the analysis, 

the Board assumed that holding 

companies subject to Category III 

standards and holding companies 

subject to Category IV standards would 

respond differently to the new 

regulatory requirements. For holding 

companies subject to Category III 

requirements, the proposal would 

generally result in a decrease in LCR 

minimum requirements that could range 

from 70 to 85 percent of the full LCR 

requirements if the firm has less than 

$75 billion in weighted short-term 

wholesale funding. The Board assumes 

that holding companies subject to 

Category III standards would adjust 

their HQLA so that they choose the 

higher of the following two options: (i) 

Preserve the same LCR, in percentage 

point terms, they had in the first quarter 

of 2018, measured using the new 

requirement, or (ii) meet their internal 

liquidity stress test (ILST) 

requirement.61 As holding companies 

subject to Category IV standards would 

no longer be subject to an LCR 

requirement under the proposal, the 

Board assumed that these firms would 

adjust their liquid asset holdings such 

that they choose the higher of the 

following: (i) Match the HQLA levels of 

holding companies that are currently 

not subject to the LCR rule or (ii) meet 

their internal liquidity stress test 

requirement. The Board assumed that 

the net cash outflows of holding 

companies, the denominator of the LCR, 

remains unchanged. 

The Board estimates that under a 70 

percent LCR requirement, holding 

companies subject to Category III 

standards that have less than $75 billion 

in weighted short-term wholesale 

funding would reduce HQLA by 

approximately $43 billion.62 With 

regard to the holding companies subject 

to Category IV standards, the Board 

estimates a reduction in HQLA of 

approximately $34 billion. The 

combined reduction represents a 2.5 


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63 If the agencies calibrate the LCR requirement at 

85 percent for banking organizations subject to 

Category III standards with less than $75 billion in 

weighted short-term wholesale funding, the Board 

estimates the likelihood of experiencing material 

financial distress during a period of elevated 

economic stress or market volatility would increase 

only modestly. 

percent reduction of aggregate HQLA 

among holding companies with $100 

billion or more in total consolidated 

assets. As a result, the Board projects 

that the reduction in LCR requirements 

would modestly reduce the liquidity 

buffers held at affected holding 

companies. 

In the second part of the analysis, the 

Board estimated how the proposal 

would affect the net interest margin, 

loan growth, and the probability that 

these holding companies could 

experience liquidity pressure during a 

period of elevated stress or volatility 

(outcome variables). The Board 

implemented this analysis by using 

regression models for the above 

variables. As an input to these 

regression models, the Board used the 

estimates for the proposal’s direct 

effects on HQLA to infer its indirect 

effects on the outcome variables. 

The Board estimates that the 

reduction in the LCR requirements 

would modestly increase the net interest 

margin at affected holding companies. 

Reducing the LCR calibration to 70 

percent for banking organizations 

subject to Category III standards that 

have less than $75 billion in weighted 

short-term wholesale funding and 

removing the LCR for holding 

companies subject to Category IV 

standards would moderately increase 

the likelihood that these holding 

companies could experience liquidity 

pressure during times of stress.63 The 

Board-only proposal would continue to 

require these holding companies to 

conduct internal liquidity stress tests 

and hold highly liquid assets sufficient 

to meet projected 30-day net stressed 

cash-flow needs under internal stress 

scenarios. In addition, the Board will 

continue to assess the safety and 

soundness of these holding companies 

through the normal course of 

supervision. 

IV. Administrative Law Matters 

A. Paperwork Reduction Act 

Certain provisions of the proposed 

rule contain ‘‘collection of information’’ 

requirements within the meaning of the 

Paperwork Reduction Act (PRA) of 1995 

(44 U.S.C. 3501–3521). In accordance 

with the requirements of the PRA, the 

agencies may not conduct or sponsor, 

and a respondent is not required to 

respond to, an information collection 

unless it displays a currently valid 

Office of Management and Budget 

(OMB) control number. The OMB 

control number for the OCC is 1557– 

0318, Board is 7100–0313, and FDIC is 

3064–0153. The OCC and FDIC may 

need to request new control numbers if 

submissions are pending under their 

respective control numbers at the time 

of this submission. These information 

collections will be extended for three 

years, with revision. The information 

collection requirements contained in 

this proposed rulemaking have been 

submitted by the OCC and FDIC to OMB 

for review and approval under section 

3507(d) of the PRA (44 U.S.C. 3507(d)) 

and section 1320.11 of the OMB’s 

implementing regulations (5 CFR 1320). 

The Board reviewed the proposed rule 

under the authority delegated to the 

Board by OMB. 

Comments are invited on: 

a. Whether the collections of 

information are necessary for the proper 

performance of the agencies’ functions, 

including whether the information has 

practical utility; 

b. The accuracy or the estimate of the 

burden of the information collections, 

including the validity of the 

methodology and assumptions used; 

c. Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

d. Ways to minimize the burden of the 

information collections on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology; and 

e. Estimates of capital or startup costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

All comments will become a matter of 

public record. Comments on aspects of 

this document that may affect reporting, 

recordkeeping, or disclosure 

requirements and burden estimates 

should be sent to the addresses listed in 

the ADDRESSES section of this document. 

A copy of the comments may also be 

submitted to the OMB desk officer for 

the agencies by mail to U.S. Office of 

Management and Budget, 725 17th 

Street NW, #10235, Washington, DC 

20503; facsimile to (202) 395–6974; or 

email to oira_submission@omb.eop.gov, 

Attention, Federal Banking Board Desk 

Officer. 

Information Collection Proposed To Be 

Revised 

Title of Information Collection: 

Recordkeeping and Disclosure 

Requirements Associated with Capital 

Adequacy. 

Frequency: Quarterly, annual. 

Affected Public: Businesses or other 

for-profit. 

Respondents: 

OCC: National banks and federal 

savings associations. 

Board: State member banks (SMBs), 

bank holding companies (BHCs), U.S. 

intermediate holding companies, 

savings and loan holding companies 

(SLHCs), and global systemically 

important bank holding companies 

(G–SIBs). 

FDIC: State nonmember banks and 

state savings associations. 

Current Actions: The proposal would 

establish a revised framework for 

determining applicability of 

requirements under the regulatory 

capital rule, the liquidity coverage ratio 

rule, and the proposed net stable 

funding ratio rule for large U.S. banking 

organizations based on their risk profile. 

The proposal would establish four 

categories of standards and apply 

tailored capital and liquidity 

requirements for banking organizations 

subject to each category. The proposal is 

consistent with a separate proposal 

issued by the Board that would apply 

enhanced prudential standards for large 

banking organizations based on those 

four categories of standards. The 

proposal would not amend the capital 

and liquidity requirements currently 

applicable to an intermediate holding 

company of a foreign banking 

organization or its subsidiary depository 

institutions. These changes will not 

result in changes to the PRA-related 

burden. Nevertheless, in order to be 

consistent across the agencies, the 

agencies would apply a conforming 

methodology for calculating the 

PRA-related burden estimates. The 

agencies would also update the number 

of respondents based on the current 

number of supervised entities even 

though this proposal only affects a 

limited number of entities. The agencies 

believe that any changes to the 

information collections associated with 

the proposed rule are the result of the 

conforming methodology and updates to 

the respondent count, and not the result 

of the proposed rule changes. 

PRA Burden Estimates 

OCC 

OMB control number: 1557–0318. 

Estimated number of respondents: 

1,365 (of which 18 are advanced 

approaches institutions). 

Estimated average hours per response: 

Minimum Capital Ratios (1,365 

Institutions Affected) 

Recordkeeping (Ongoing)—16. 


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64The OCC calculated the number of small 

entities using the SBA’s size thresholds for 

commercial banks and savings institutions, and 

trust companies, which are $550 million and $38.5 

million, respectively. Consistent with the General 

Principles of Affiliation, 13 CFR 121.103(a), the 

OCC counted the assets of affiliated financial 

institutions when determining whether to classify 

a national bank or Federal savings association as a 

small entity. 

65See 13 CFR 121.201. Effective July 14, 2014, the 

SBA revised the size standards for banking 

organizations to $550 million in assets from $500 

million in assets. 79 FR 33647 (June 12, 2014). 

66See 12 CFR part 217. 

67See 12 CFR part 249. 

68See 12 CFR 217.1(c)(1)(ii) and (iii); 12 CFR part 

225, appendix C; 12 CFR 238.9. 

Standardized Approach (1,365 

Institutions Affected for Ongoing) 

Recordkeeping (Initial setup)—122. 

Recordkeeping (Ongoing)—20. 

Disclosure (Initial setup)—226.25. 

Disclosure (Ongoing quarterly)— 

131.25. 

Advanced Approach (18 Institutions 

Affected for Ongoing) 

Recordkeeping (Initial setup)—460. 

Recordkeeping (Ongoing)—540.77. 

Recordkeeping (Ongoing quarterly)— 

20. 

Disclosure (Initial setup)—280. 

Disclosure (Ongoing)—5.78. 

Disclosure (Ongoing quarterly)—35. 

Estimated annual burden hours: 1,088 

hours initial setup, 64,929 hours for 

ongoing. 

Board 

Agency form number: FR Q. 

OMB control number: 7100–0313. 

Estimated number of respondents: 

1,431 (of which 17 are advanced 

approaches institutions). 

Estimated average hours per response: 

Minimum Capital Ratios (1,431 

Institutions Affected for Ongoing) 

Recordkeeping (Ongoing)—16. 

Standardized Approach (1,431 

Institutions Affected for Ongoing) 

Recordkeeping (Initial setup)—122. 

Recordkeeping (Ongoing)—20. 

Disclosure (Initial setup)—226.25. 

Disclosure (Ongoing quarterly)— 

131.25. 

Advanced Approach (17 Institutions 

Affected) 

Recordkeeping (Initial setup)—460. 

Recordkeeping (Ongoing)—540.77. 

Recordkeeping (Ongoing quarterly)— 

20. 

Disclosure (Initial setup)—280. 

Disclosure (Ongoing)—5.78. 

Disclosure (Ongoing quarterly)—35. 

Disclosure (Table 13 quarterly)—5. 

Risk-Based Capital Surcharge for GSIBs 

(21 Institutions Affected) 

Recordkeeping (Ongoing)—0.5. 

Estimated annual burden hours: 1,088 

hours initial setup, 78,183 hours for 

ongoing. 

FDIC 

OMB control number: 3064–0153. 

Estimated number of respondents: 

3,575 (of which 2 are advanced 

approaches institutions). 

Estimated average hours per response: 

Minimum Capital Ratios (3,575 

Institutions Affected) 

Recordkeeping (Ongoing)—16. 

Standardized Approach (3,575 

Institutions Affected for Ongoing) 

Recordkeeping (Initial setup)—122. 

Recordkeeping (Ongoing)—20. 

Disclosure (Initial setup)—226.25. 

Disclosure (Ongoing quarterly)— 

131.25. 

Advanced Approach (2 Institutions 

Affected for Ongoing) 

Recordkeeping (Initial setup)—460. 

Recordkeeping (Ongoing)—540.77. 

Recordkeeping (Ongoing quarterly)— 

20. 

Disclosure (Initial setup)—280. 

Disclosure (Ongoing)—5.78. 

Disclosure (Ongoing quarterly)—35. 

Estimated annual burden hours: 1,088 

hours initial setup, 130,758 hours for 

ongoing. 

The proposed rule would also require 

changes to the Consolidated Reports of 

Condition and Income (Call Reports) 

(FFIEC 031, FFIEC 041, and FFIEC 051; 

OMB Nos. 1557–0081 (OCC), 7100–0036 

(Board), and 3064–0052 (FDIC)) and 

Risk-Based Capital Reporting for 

Institutions Subject to the Advanced 

Capital Adequacy Framework (FFIEC 

101; OMB Nos. 1557–0239 (OCC), 7100– 

0319 (Board), and 3064–0159 (FDIC)), 

which will be addressed in a separate 

Federal Register notice. 

B. Regulatory Flexibility Act Analysis 

OCC: The Regulatory Flexibility Act, 

5 U.S.C. 601 et seq., (RFA), requires an 

agency, in connection with a proposed 

rule, to prepare an Initial Regulatory 

Flexibility Analysis describing the 

impact of the rule on small entities 

(defined by the SBA for purposes of the 

RFA to include commercial banks and 

savings institutions with total 

consolidated assets of $550 million or 

less and trust companies with total 

consolidated assets of $38.5 million of 

less) or to certify that the proposed rule 

would not have a significant economic 

impact on a substantial number of small 

entities. 

As of June 30, 2018, the OCC 

supervises 886 small entities.64

As part of our analysis, we consider 

whether the proposal will have a 

significant economic impact on a 

substantial number of small entities, 

pursuant to the RFA. This proposal only 

applies to large banking organizations, 

therefore, it will not impact any OCCsupervised small entities. For this 

reason, the OCC certifies that the 

proposed rule would not have a 

significant economic impact on a 

substantial number of OCC-supervised 

small entities. 

Board: The RFA requires an agency to 

either provide an initial regulatory 

flexibility analysis with a proposal or 

certify that the proposal will not have a 

significant impact on a substantial 

number of small entities. Under 

regulations issued by the SBA, a small 

entity includes a bank, bank holding 

company, or savings and loan holding 

company with assets of $550 million or 

less (small banking organization).65 As 

of June 30, 2018, there were 

approximately 3,304 small bank holding 

companies, 216 small savings and loan 

holding companies, and 535 small 

SMBs. 

The Board has considered the 

potential impact of the proposed rule on 

small entities in accordance with the 

RFA. Based on the Board’s analysis, and 

for the reasons stated below, the Board 

believes that this proposed rule will not 

have a significant economic impact on 

a substantial of number of small entities. 

Nevertheless, the Board is providing an 

initial regulatory flexibility analysis 

with respect to this proposed rule. A 

final regulatory flexibility analysis will 

be conducted after comments received 

during the public comment period have 

been considered. The Board welcomes 

comment on all aspects of its analysis. 

In particular, the Board requests that 

commenters describe the nature of any 

impact on small entities and provide 

empirical data to illustrate and support 

the extent of the impact. 

As discussed in the SUPPLEMENTARY

INFORMATION, the Board is proposing to 

adopt amendments to the Board’s 

capital rule 66 and LCR rule.67 The 

capital rule applies to all state member 

banks, bank holding companies, and 

covered savings and loan holding 

companies, except for institutions that 

are subject to the Board’s Small Bank 

Holding Company and Small Savings 

and Loan Holding Company Policy 

Statement, which apply to bank holding 

companies and savings and loan 

holding companies with less than $3 

billion in total consolidated assets that 

also meet certain additional criteria.68

The proposed changes to the capital rule 


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69 5 U.S.C. 601 et seq. 

70The SBA defines a small banking organization 

as having $550 million or less in assets, where ‘‘a 

financial institution’s assets are determined by 

averaging the assets reported on its four quarterly 

financial statements for the preceding year.’’ See 13 

CFR 121.201 (as amended, effective December 2, 

2014). ‘‘SBA counts the receipts, employees, or 

other measure of size of the concern whose size is 

at issue and all of its domestic and foreign 

affiliates.’’ See 13 CFR 121.103. Following these 

regulations, the FDIC uses a covered entity’s 

affiliated and acquired assets, averaged over the 

preceding four quarters, to determine whether the 

covered entity is ‘‘small’’ for the purposes of RFA. 

71Call Report data, June 30th, 2018. 

72Call Report data, June 30th 2018. 

73Public Law 106–102, section 722, 113 Stat. 

1338, 1471 (1999). 74 12 U.S.C. 4802(a). 

generally affect state member banks, 

bank holding companies, and covered 

savings and loan holding companies 

with $50 billion or more in total 

consolidated assets. Thus, most state 

member banks, bank holding 

companies, and covered savings and 

loan holding companies that would be 

subject to the proposed rule exceed the 

$550 million asset threshold at which a 

banking organization would qualify as a 

small banking organization. 

The Board is also proposing changes 

to regulatory requirements under the 

LCR rule. The LCR rule applies to state 

member banks, bank holding companies 

and covered savings and loan holding 

companies with (i) $250 billion or more 

in total consolidated assets; or (ii) total 

consolidated on-balance sheet foreign 

exposure equal to $10 billion or more. 

The LCR rule also applies to state 

member banks with total consolidated 

assets equal to $10 billion or more that 

are consolidated subsidiaries of a 

covered bank holding company. The 

modified LCR, which is part of the LCR 

rule, applies to certain bank holding 

companies and covered savings and 

loan holding companies with $50 

billion or more in total consolidated 

assets. Most institutions that are affected 

by the proposal therefore substantially 

exceed the $550 million asset threshold 

at which a banking entity is considered 

a ‘‘small entity’’ under SBA regulations. 

The agencies anticipate proposing 

updates to the relevant reporting forms 

at a later date to the extent necessary to 

align with the proposed changes to the 

capital rule and LCR rule. Given that the 

proposed rule does not impact the 

recordkeeping and reporting 

requirements to which that affected 

small banking organizations are 

currently subject, there would be no 

change to the information that small 

banking organizations must track and 

report. 

The Board does not believe that the 

proposed rule duplicates, overlaps, or 

conflicts with any other Federal rules. 

In addition, there are no significant 

alternatives to the proposed rule. In 

light of the foregoing, the Board does 

not believe that the proposed rule, if 

adopted in final form, would have a 

significant economic impact on a 

substantial number of small entities. 

FDIC: The Regulatory Flexibility Act 

(RFA), 5 U.S.C. 601 et seq., generally 

requires an agency, in connection with 

a proposed rule, to prepare and make 

available for public comment an initial 

regulatory flexibility analysis that 

describes the impact of a proposed rule 

on small entities.69 However, a 

regulatory flexibility analysis is not 

required if the agency certifies that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities. The Small 

Business Administration (SBA) has 

defined ‘‘small entities’’ to include 

banking organizations with total assets 

of less than or equal to $550 million 

who are independently owned and 

operated or owned by a holding 

company with less than $550 million in 

total assets.70 For the reasons described 

below and under section 605(b) of the 

RFA, the FDIC certifies that the 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities. 

The FDIC supervises 3,575 

institutions, of which 2,763 are 

considered small entities for the 

purposes of RFA.71

This proposed rule will affect all 

institutions subject to the current 

advanced approaches regulations and 

their subsidiaries. The FDIC does not 

supervise any advanced approaches 

banking organizations or subsidiaries 

thereof that have $550 million or less in 

total consolidated assets.72 Since this 

proposal does not affect any institutions 

that are defined as small entities for the 

purposes of the RFA, the FDIC certifies 

that the proposed rule will not have a 

significant economic impact on a 

substantial number of small entities. 

The FDIC invites comments on all 

aspects of the supporting information 

provided in this RFA section. In 

particular, would this rule have any 

significant effects on small entities that 

the FDIC has not identified? 

C. Plain Language 

Section 722 of the Gramm-LeachBliley Act 73 requires the Federal 

banking agencies to use plain language 

in all proposed and final rules 

published after January 1, 2000. The 

agencies have sought to present the 

proposed rule in a simple and 

straightforward manner, and invite 

comment on the use of plain language. 

For example: 

• Have the agencies organized the 

material to suit your needs? If not, how 

could they present the proposed rule 

more clearly? 

• Are the requirements in the 

proposed rule clearly stated? If not, how 

could the proposed rule be more clearly 

stated? 

• Do the regulations contain technical 

language or jargon that is not clear? If 

so, which language requires 

clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 

easier to understand? If so, what 

changes would achieve that? 

• Would more, but shorter, sections 

be better? If so, which sections should 

be changed?’’ 

• What other changes can the 

agencies incorporate to make the 

regulation easier to understand? 

D. OCC Unfunded Mandates Reform Act 

of 1995 Determination 

The OCC analyzed the proposed rule 

under the factors set forth in the 

Unfunded Mandates Reform Act of 1995 

(UMRA) (2 U.S.C. 1532). Under this 

analysis, the OCC considered whether 

the proposed rule includes a Federal 

mandate that may result in the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year (adjusted for inflation). 

The OCC has determined that this 

proposed rule would not result in 

expenditures by State, local, and Tribal 

governments, or the private sector, of 

$100 million or more in any one year. 

Accordingly, the OCC has not prepared 

a written statement to accompany this 

proposal. 

E. Riegle Community Development and 

Regulatory Improvement Act of 1994 

Pursuant to section 302(a) of the 

Riegle Community Development and 

Regulatory Improvement Act 

(RCDRIA),74 in determining the effective 

date and administrative compliance 

requirements for new regulations that 

impose additional reporting, disclosure, 

or other requirements on insured 

depository institutions, each Federal 

banking agency must consider, 

consistent with principles of safety and 

soundness and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 


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66042 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

75 Id. 

benefits of such regulations. In addition, 

section 302(b) of RCDRIA requires new 

regulations and amendments to 

regulations that impose additional 

reporting, disclosures, or other new 

requirements on insured depository 

institutions generally to take effect on 

the first day of a calendar quarter that 

begins on or after the date on which the 

regulations are published in final 

form.75

The agencies note that comment on 

these matters has been solicited in other 

sections of this SUPPLEMENTARY

INFORMATION section, and that the 

requirements of RCDRIA will be 

considered as part of the overall 

rulemaking process. In addition, the 

agencies also invite any other comments 

that further will inform the agencies’ 

consideration of RCDRIA. 

12 CFR Part 3 

Administrative practice and 

procedure, Asset risk-weighting 

methodologies, Banking, Banks, Capital 

adequacy, Capital requirements, Federal 

savings associations, National banks, 

Reporting and recordkeeping 

requirements, Risk. 

12 CFR Part 50 

Administrative practice and 

procedure, Banking, Banks, Liquidity, 

Reporting and recordkeeping 

requirements, Savings associations. 

12 CFR Part 217 

Administrative practice and 

procedure, Banking, Banks, Capital, 

Federal Reserve System, Holding 

companies, Reporting and 

recordkeeping requirements, Risk, 

Securities. 

12 CFR Part 249 

Administrative practice and 

procedure, Banking, Banks, Federal 

Reserve System, Holding companies, 

Liquidity, Reporting and recordkeeping 

requirements. 

12 CFR Part 324 

Administrative practice and 

procedure, Banking, Banks, Capital 

adequacy, Reporting and recordkeeping 

requirements, Savings associations, 

State non-member banks. 

12 CFR Part 329 

Administrative practice and 

procedure, Banking, Banks, Federal 

Deposit Insurance Corporation, 

Liquidity, Reporting and recordkeeping 

requirements, Savings associations. 

Authority and Issuance 

For the reasons stated in the 

Supplementary Information, chapter I of 

title 12 of the Code of Federal 

Regulations is proposed to be amended 

as follows: 

Department of the Treasury 

Office of the Comptroller of the 

Currency 

12 CFR CHAPTER I 

PART 3—CAPITAL ADEQUACY 

STANDARDS 

■ 1. The authority citation for part 3 

continues to read as follows: 

Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 

1463, 1464, 1818, 1828(n), 1828 note, 1831n 

note, 1835, 3907, 3909, and 5412(b)(2)(B). 

■ 2. In § 3.2 add the definitions of 

Category II national bank or Federal 

savings association, and Category III 

national bank or Federal savings 

association, FR Y–9LP, and FR Y–15 in 

alphabetical order to read as follows: 

§ 3.2 Definitions. 

* * * * * 

Category II national bank or Federal 

savings association means: 

(1) A national bank or Federal savings 

association that is a subsidiary of a 

Category II banking organization, as 

defined pursuant to 12 CFR 252.5 or 12 

CFR 238.10, as applicable; or 

(2) A national bank or Federal savings 

association that: 

(i) (A) Has total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Consolidated 

Report of Condition and Income (Call 

Report), equal to $700 billion or more. 

If the national bank or Federal savings 

association has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Call Report, 

of $100 billion or more but less than 

$700 billion. If the national bank or 

Federal savings association has not filed 

the Call Report for each of the four most 

recent quarters, total consolidated assets 

means the average of its total 

consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable; and 

(2) Cross-jurisdictional activity, 

calculated based on the average of its 

cross jurisdictional activity for the four 

most recent calendar quarters, of $75 

billion or more. Cross-jurisdictional 

activity is the sum of crossjurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(ii) After meeting the criteria in 

paragraph (2)(i) of this section, a 

national bank or Federal savings 

association continues to be a Category II 

national bank or Federal savings 

association until the national bank or 

Federal savings association has: 

(A) (1) Less than $700 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; and 

(2) Less than $75 billion in crossjurisdictional activity for each of the 

four most recent calendar quarters. 

Cross-jurisdictional activity is the sum 

of cross-jurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(B) Less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; or 

(C) Is a subsidiary of a global 

systemically important BHC. Category 

III national bank or Federal savings 

association means: 

(1) A national bank or Federal savings 

association that is a subsidiary of a 

Category III banking organization as 

defined pursuant to 12 CFR 252.5 or 12 

CFR 238.10, as applicable; or 

(2) A national bank or Federal savings 

association that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $250 billion or more. If the 

national bank or Federal savings 

association has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Call Report, 

of $100 billion or more but less than 


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$250 billion. If the national bank or 

Federal savings association has not filed 

the Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; and 

(2) At least one of the following, each 

calculated as the average of the four 

most recent consecutive quarters, or if 

the national bank or Federal savings 

association has not filed each applicable 

reporting form for each of the four most 

recent calendar quarters, for the most 

recent quarter or quarters, as applicable: 

(i) Total nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

equal to $75 billion or more; 

(ii) Off-balance sheet exposure equal 

to $75 billion or more. Off-balance sheet 

exposure is a national bank’s or Federal 

savings association’s total exposure, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the national 

bank or Federal savings association, as 

reported on the Call Report; or 

(iii) Weighted short-term wholesale 

funding, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, equal to $75 

billion or more. 

(ii) After meeting the criteria in 

paragraphs (2)(i) of this definition, a 

national bank or Federal savings 

association continues to be a Category 

III national bank or Federal savings 

association until the national bank or 

Federal savings association has: 

(A)(1) Less than $250 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(2) Less than $75 billion in total 

nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

for each of the four most recent calendar 

quarters; 

(3) Less than $75 billion in weighted 

short-term wholesale funding, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, for each of 

the four most recent calendar quarters; 

and 

(4) Less than $75 billion in off-balance 

sheet exposure for each of the four most 

recent calendar quarters. Off-balance 

sheet exposure is a national bank’s or 

Federal savings association’s total 

exposure, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the national 

bank or Federal savings association, as 

reported on the Call Report; or 

(B) Less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(C) Is a Category II national bank or 

Federal savings association; or 

(D) Is a subsidiary of a global 

systemically important BHC. 

FR Y–15 means the Banking 

Organization Systemic Risk Report. 

FR Y–9LP means the Parent Company 

Only Financial Statements for Large 

Holding Companies. 

* * * * * 

■ 3. In § 3.10, revise paragraphs (a)(6), 

(c) introductory text, and (c)(4)(i) 

introductory text to read as follows: 

§ 3.10 Minimum capital requirements. 

(a) * * * 

(6) For advanced approaches national 

banks and Federal savings associations, 

and for Category III national banks and 

Federal savings associations, a 

supplementary leverage ratio of 3 

percent. 

* * * * * 

(c) Advanced approaches capital ratio 

calculations. An advanced approaches 

national bank or Federal savings 

association that has completed the 

parallel run process and received 

notification from the OCC pursuant to 

§ 3.121(d) must determine its regulatory 

capital ratios as described in paragraphs 

(c)(1) through (3) of this section. An 

advanced approaches national bank or 

Federal savings association must 

determine its supplementary leverage 

ratio in accordance with paragraph 

(c)(4) of this section, beginning with the 

calendar quarter immediately following 

the quarter in which the national bank 

or Federal savings association 

institution meets any of the criteria in 

§ 3.100(b)(1). A Category III national 

bank or Federal savings association 

must determine its supplementary 

leverage ratio in accordance with 

paragraph (c)(4) of this section, 

beginning with the calendar quarter 

immediately following the quarter in 

which the national bank or Federal 

savings association is identified as a 

Category III national bank or Federal 

savings association. 

* * * * * 

(4) Supplementary leverage ratio. (i) 

An advanced approaches national 

bank’s or Federal savings association’s 

or a Category III national bank’s or 

Federal savings association’s 

supplementary leverage ratio is the ratio 

of its tier 1 capital to total leverage 

exposure, the latter which is calculated 

as the sum of: 

* * * * * 

■ 4. Amend § 3.11 as follows: 

■ a. Revise the section heading; 

■ b. Revise paragraph (b)(1) 

introductory text; and 

■ c. Revise paragraph (b)(1)(ii). 

The revisions read as follows: 

§ 3.11 Capital conservation buffer, 

countercyclical capital buffer amount, and 

GSIB surcharge. 

* * * * * 

(b) Countercyclical capital buffer 

amount—(1) General. An advanced 

approaches national bank or Federal 

savings association, and a Category III 

national bank or Federal savings 

association, must calculate a 

countercyclical capital buffer amount in 

accordance with the following 

paragraphs for purposes of determining 

its maximum payout ratio under Table 

1 to § 3.11. 

* * * * * 

(ii) Amount. An advanced approaches 

national bank or Federal savings 

association, and a Category III national 

bank or Federal savings association, has 

a countercyclical capital buffer amount 

determined by calculating the weighted 

average of the countercyclical capital 

buffer amounts established for the 

national jurisdictions where the 

national bank’s or Federal savings 

association’s private sector credit 

exposures are located, as specified in 

paragraphs (b)(2) and (3) of this section. 

* * * * * 

■ 5. In § 3.100, revise paragraphs (b)(1) 

introductory text and (b)(1)(i) through 

(v) to read as follows: 

§ 3.100 Purpose, applicability, and 

principle of conservatism. 

* * * * * 

(b) Applicability. (1) This subpart 

applies to a national bank or Federal 

savings association that: 

(i) Is a subsidiary of a global 

systemically important BHC, as 

identified pursuant to 12 CFR 217.402; 

(ii) Is a Category II national bank or 

Federal savings association; 

(iii) Is a subsidiary of a depository 

institution that uses the advanced 

approaches pursuant to subpart E of 12 

CFR part 3 (OCC), 12 CFR part 217 

(Board), or 12 CFR part 324 (FDIC) to 

calculate its risk-based capital 

requirements; or 

(iv) Is a subsidiary of a bank holding 

company or savings and loan holding 

company that uses the advanced 

approaches pursuant to subpart E of 12 

CFR part 217 to calculate its risk-based 

capital requirements; or 

(v) Elects to use this subpart to 

calculate its total risk-weighted assets; 

or 

* * * * * 


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66044 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

PART 50—LIQUIDITY RISK 

MEASUREMENT STANDARDS 

■ 6. The authority citation for part 50 

continues to read as follows: 

Authority: 12 U.S.C. 1 et seq., 93a, 481, 

1818, and 1462 et seq. 

■ 7. In § 50.1, revise paragraphs (b)(1) 

and (2) to read as follows: 

§ 50.1 Purpose and applicability. 

* * * * * 

(b) Applicability of Minimum 

Liquidity Standards. (1) A national bank 

or Federal savings association is subject 

to the minimum liquidity standard and 

other requirements of this part if: 

(i) It is a GSIB depository institution, 

a Category II national bank or Federal 

savings association, or a Category III 

national bank or Federal savings 

association; 

(ii) It is an national bank or Federal 

savings association that has total 

consolidated assets equal to $10 billion 

or more, as reported on the most recent 

year-end Call Report, and it is a 

consolidated subsidiary of a covered 

intermediate holding company that: 

(A) Has total consolidated assets of 

$250 billion or more, as reported on the 

most recent year-end (as applicable): 

(1) Consolidated Financial Statements 

for Holding Companies reporting form 

(FR Y–9C), or, if the covered 

intermediate holding company is not 

required to report on the FR Y–9C, its 

estimated total consolidated assets as of 

the most recent year end, calculated in 

accordance with the instructions to the 

FR Y–9C; or 

(2) Call Report; or 

(B) Has total consolidated on-balance 

sheet foreign exposure at the most 

recent year-end equal to $10 billion or 

more (where total on-balance sheet 

foreign exposure equals total crossborder claims less claims with a head 

office or guarantor located in another 

country plus redistributed guaranteed 

amounts to the country of the head 

office or guarantor plus local country 

claims on local residents plus 

revaluation gains on foreign exchange 

and derivative transaction products, 

calculated in accordance with the 

Federal Financial Institutions 

Examination Council (FFIEC) 009 

Country Exposure Report); or 

(iii) It is a national bank or Federal 

savings association for which the OCC 

has determined that application of this 

part is appropriate in light of the 

national bank’s or Federal savings 

association’s asset size, level of 

complexity, risk profile, scope of 

operations, affiliation with foreign or 

domestic covered entities, or risk to the 

financial system. 

(2)(i) A national bank or Federal 

savings association becomes subject to 

the minimum liquidity standard and 

other requirements of this part under 

paragraphs (b)(1)(i) of this section must 

comply with the requirements of this 

part beginning on the first day of the 

second calendar quarter after which the 

national bank or Federal savings 

association becomes subject to the 

minimum liquidity standard and other 

requirements of this part, except: 

(A) A national bank or Federal savings 

association must calculate and maintain 

a liquidity coverage ratio monthly, on 

each calculation date that is the last 

business day of the applicable calendar 

month, for the first three calendar 

quarters after the national bank or 

Federal savings association begins 

complying with the minimum liquidity 

standard and other requirements of this 

part; 

(B) Beginning one year after the first 

year in which the national bank or 

Federal savings association becomes 

subject to the minimum liquidity 

standard and other requirements of this 

part under paragraph (b)(1)(i) of this 

section, and thereafter, the national 

bank or Federal savings association 

must calculate and maintain a liquidity 

coverage ratio on each calculation date; 

(ii) A national bank or Federal savings 

association that becomes subject to this 

part under paragraph (b)(1)(ii) of this 

section must comply with the 

requirements of this part beginning on 

April 1 of the year in which the national 

bank or Federal savings association 

becomes subject to the minimum 

liquidity standard and other 

requirements of this part, except: 

(A) From April 1 to December 31 of 

the year in which the national bank or 

Federal savings association becomes 

subject to the minimum liquidity 

standard and other requirements of this 

part, the national bank or Federal 

savings association must calculate and 

maintain a liquidity coverage ratio 

monthly, on each calculation date that 

is the last business day of the applicable 

calendar month; and 

(B) Beginning January 1 of the year 

after the first year in which the national 

bank or Federal savings association 

becomes subject to the minimum 

liquidity standard and other 

requirements of this part under 

paragraph (b)(1) of this section, and 

thereafter, the national bank or Federal 

savings association must calculate and 

maintain a liquidity coverage ratio on 

each calculation date. 

(iii) A national bank or Federal 

savings association that becomes subject 

to the minimum liquidity standard and 

other requirements of this part under 

(b)(1)(iii) of this section must comply 

with the requirements of this part 

subject to a transition period specified 

by the OCC. 

* * * * * 

■ 8. In § 50.3, add the definitions of 

Average weighted short-term wholesale 

funding, Call Report, Category II 

national bank or Federal savings 

association, Category III national bank 

or Federal savings association, Covered 

intermediate holding company, FR 

Y–9LP, FR Y–15, Global systemically 

important BHC, and GSIB depository 

institution, in alphabetical order to read 

as follows: 

§ 50.3 Definitions. 

* * * * * 

Average weighted short-term 

wholesale funding has the same 

meaning as in 12 CFR 252.2. 

* * * * * 

Call Report means the Consolidated 

Reports of Condition and Income. 

Category II national bank or Federal 

savings association means: 

(1) A national bank or Federal savings 

association that is a subsidiary of a 

depository institution holding company 

that is defined as a Category II Boardregulated institution pursuant to 12 CFR 

249.3 and has total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $10 billion or more. If the 

national bank or Federal savings 

association has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable. After meeting the criteria 

under this paragraph (1), a national 

bank or Federal savings association 

continues to be a Category II national 

bank or Federal savings association 

until the national bank or Federal 

savings association has less than $10 

billion in total consolidated assets, as 

reported on the Call Report, for each of 

the four most recent calendar quarters, 

or the national bank or Federal savings 

association is no longer a consolidated 

subsidiary of a category II Boardregulated institution; or 

(2) A national bank or Federal savings 

association that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Consolidated 


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Report of Condition and Income (Call 

Report), equal to $700 billion or more. 

If the national bank or Federal savings 

association has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Call Report, 

of $100 billion or more but less than 

$700 billion. If the national bank or 

Federal savings association has not filed 

the Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; and 

(2) Cross-jurisdictional activity, 

calculated based on the average of its 

cross-jurisdictional activity for the four 

most recent consecutive quarters, of $75 

billion or more. Cross-jurisdictional 

activity is the sum of crossjurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(ii) After meeting the criteria in 

paragraph (2)(i) of this section, a 

national bank or Federal savings 

association continues to be a Category II 

national bank or Federal savings 

association until the national bank or 

Federal savings association has: 

(A)(1) Less than $700 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; and 

(2) Less than $75 billion in crossjurisdictional activity for each of the 

four most recent calendar quarters. 

Cross-jurisdictional activity is the sum 

of cross-jurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(B) Less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; or 

(C) Is a GSIB depository institution. 

Category III national bank or Federal 

savings association means: 

(1) A national bank or Federal savings 

association that is a subsidiary of a 

depository institution holding company 

that is defined as a Category III Boardregulated institution pursuant to 12 CFR 

249.3 and has total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $10 billion or more. If the 

national bank or Federal savings 

association has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable. After meeting the criteria 

under this paragraph (1), a national 

bank or Federal savings association 

continues to be a Category III national 

bank or Federal savings association 

until the national bank or Federal 

savings association has less than $10 

billion in total consolidated assets, as 

reported on the Call Report, for each of 

the four most recent calendar quarters, 

or the national bank or Federal savings 

association is no longer a consolidated 

subsidiary of a Category III Boardregulated institution; or 

(2) A national bank or Federal savings 

association that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Consolidated 

Report of Condition and Income (Call 

Report), equal to $250 billion or more. 

If the national bank or Federal savings 

association has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

national bank’s or Federal savings 

association’s total consolidated assets 

for the four most recent calendar 

quarters as reported on the Call Report, 

of at least $100 billion but less than 

$700 billion. If the national bank or 

Federal savings association has not filed 

the Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; and 

(2) One or more of the following, each 

measured as the average of the four most 

recent quarters, or if the national bank 

or Federal savings bank has not filed 

each applicable reporting form for each 

of the four most recent calendar 

quarters, for the most recent quarter or 

quarters, as applicable: 

(i) Total nonbank assets, calculated in 

accordance with instructions to the FR 

Y–9LP or equivalent reporting form, 

equal to $75 billion or more; 

(ii) Off-balance sheet exposure, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the national 

bank or Federal savings association, as 

reported on the Call Report, equal to $75 

billion or more; or 

(iii) Weighted short-term wholesale 

funding, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, equal to $75 

billion or more. 

(ii) After meeting the criteria in 

paragraph (2)(i) of this section, a 

national bank or Federal savings 

association continues to be a Category 

III national bank or Federal savings 

association until the national bank or 

Federal savings association has: 

(A)(1) Less than $250 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(2) Less than $75 billion in total 

nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

for each of the four most recent calendar 

quarters; 

(3) Less than $75 billion in weighted 

short-term wholesale funding, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, for each of 

the four most recent calendar quarters; 

and 

(4) Less than $75 billion in off-balance 

sheet exposure for each of the four most 

recent calendar quarters. Off-balance 

sheet exposure is a national bank’s or 

Federal savings association’s total 

exposure, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the national 

bank or Federal savings association, as 

reported on the Call Report; or 

(B) Less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; or 

(C) Is a Category II national bank or 

Federal savings bank; or 

(D) Is a GSIB depository institution. 

* * * * * 

Covered intermediate holding 

company means a U.S. intermediate 

holding company that: 

(1) Was established or designated by 

a foreign banking organization pursuant 

to 12 CFR 252.153; and 

(2) Is a covered depository institution 

holding company. 

* * * * * 


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FR Y–15 means the Banking 

Organization Systemic Risk Report. 

FR Y–9LP means the Parent Company 

Only Financial Statements for Large 

Holding Companies. 

* * * * * 

Global systemically important BHC 

means a bank holding company 

identified as a global systemically 

important BHC pursuant to 12 CFR 

217.402. 

GSIB depository institution means a 

depository institution that is a 

consolidated subsidiary of a global 

systemically important BHC and has 

total consolidated assets equal to $10 

billion or more, calculated based on the 

average of the depository institution’s 

total consolidated assets for the four 

most recent calendar quarters as 

reported on the Call Report. If the 

depository institution has not filed the 

Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

calendar quarter or quarters, as 

applicable. After meeting the criteria 

under this definition, a depository 

institution continues to be a GSIB 

depository institution until the 

depository institution has less than $10 

billion in total consolidated assets, as 

reported on the Call Report, for each of 

the four most recent calendar quarters, 

or the depository institution is no longer 

a consolidated subsidiary of a global 

systemically important BHC. 

* * * * * 

■ 9. In § 50.30: 

■ a. Revise paragraph (a); and 

■ b. Add paragraph (c) and Table 1. 

The revision and additions read as set 

forth below. 

§ 50.30 Total net cash outflow amount. 

(a) Calculation of total net cash 

outflow amount. As of the calculation 

date, a national bank’s or Federal 

savings association’s total net cash 

outflow amount equals the national 

bank’s or Federal savings association’s 

outflow adjustment percentage as 

determined under paragraph (c) of this 

section multiplied by: 

(1) The sum of the outflow amounts 

calculated under § 50.32(a) through (l); 

minus 

(2) The lesser of: 

(i) The sum of the inflow amounts 

calculated under § 50.33(b) through (g); 

and 

(ii) 75 percent of the amount 

calculated under paragraph (a)(1) of this 

section; plus 

(3) The maturity mismatch add-on as 

calculated under paragraph (b) of this 

section. 

* * * * * 

(c) Outflow adjustment percentage. A 

national bank’s or Federal savings 

association’s outflow adjustment 

percentage is determined pursuant to 

Table 1 to § 50.30. 

TABLE 1 TO § 50.30—OUTFLOW ADJUSTMENT PERCENTAGES

Outflow adjustment 

percentage 

A GSIB depository institution ................................................................................................................................................... 100 

Category II national bank or Federal savings association ...................................................................................................... 100 

Category III national bank or Federal savings association that: ............................................................................................. 100 

(1) Is a consolidated subsidiary of a Category III banking organization pursuant to 12 CFR 252.5 or 12 CFR 238.10 

with $75 billion or more in average weighted short-term wholesale funding; or 

(2) Has $75 billion or more in average weighted short-term wholesale funding and is not consolidated under a holding company 

Category III national bank or Federal savings association that: ............................................................................................. [70 to 85] 

(1) Is a consolidated subsidiary of a Category III banking organization pursuant to 12 CFR 252.5 or 12 CFR 238.10 

with less than $75 billion in average weighted short-term wholesale funding; or 

(2) Has less than $75 billion in average weighted short-term wholesale funding and is not consolidated under a 

holding company 

A national bank or Federal savings association that is described in section .50(b)(1)(ii) ...................................................... 100 

[Re-proposal of Net Stable Funding 

Ratio’s Applicability] 

PART 50—LIQUIDITY RISK 

MEASUREMENT STANDARDS 

■ 10. In § 50.1, add paragraph (c) to read 

as follows: 

§ 50.1 Purpose and applicability. 

* * * * * 

(c) Applicability of the minimum 

stable funding standard. (1) A national 

bank or Federal savings association is 

subject to the minimum stable funding 

and other requirements of subparts K 

through M if: 

(i) It is a GSIB depository institution, 

a Category II national bank or Federal 

savings association, a Category III 

national bank or Federal savings 

association that is the consolidated 

subsidiary of a Category III Boardregulated institution pursuant to 12 CFR 

249.3 with $75 billion or more in 

average weighted short-term wholesale 

funding, or a Category III national bank 

or Federal savings association with $75 

billion or more in average weighted 

short-term wholesale funding that is not 

consolidated under a holding company; 

(ii) It is a national bank or Federal 

savings association that has total 

consolidated assets equal to $10 billion 

or more, or reported on the most recent 

year-end Call Report, and is a 

consolidated subsidiary of a covered 

intermediate holding company that: 

(A) Has total consolidated assets of 

$250 billion or more, as reported on the 

most recent year-end (as applicable): 

(1) Consolidated Financial Statements 

for Holding Companies reporting form 

(FR Y–9C), or, if the covered 

intermediate holding company is not 

required to report on the FR Y–9C, its 

estimated consolidated assets as of the 

most recent year end, calculated in 

accordance with the instructions to the 

FR Y–9C; 

(2) Call Report; or 

(B) Has total consolidated on-balance 

sheet foreign exposure at the most 

recent year-end equal to $10 billion or 

more (where total on-balance sheet 

foreign exposure equals total crossborder claims less claims with a head 

office or guarantor located in another 

country plus redistributed guaranteed 

amounts to the country of the head 

office or guarantor plus local country 

claims on local residents plus 

revaluation gains on foreign exchange 

and derivative transaction products, 

calculated in accordance with the 

Federal Financial Institutions 

Examination Council (FFIEC) 009 

Country Exposure Report); 

(iii) It is a Category III national bank 

or Federal savings association that 

meets the criteria in § 50.120(a) but does 

not meet the criteria in paragraph 


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(d)(1)(i) of this section, and is subject to 

the requirements of this part in 

accordance with subpart M of this part; 

(iv) The OCC has determined that 

application of this part is appropriate in 

light of the national bank’s or Federal 

savings association’s asset size, level of 

complexity, risk profile, scope of 

operations, affiliation with foreign or 

domestic covered entities, or risk to the 

financial system. 

(2)(i) A national bank or Federal 

savings association that becomes subject 

to the minimum stable funding standard 

and other requirements of subparts K 

through M of this part under paragraph 

(d)(1)(i) of this section on the effective 

date, must comply with the 

requirements of these subparts 

beginning on the first day of the second 

calendar quarter after which the 

national bank or Federal savings 

association becomes subject to the 

minimum stable funding standard and 

other requirements of this part. 

(ii) A national bank or Federal savings 

association that becomes subject to the 

minimum stable funding standard and 

other requirements of subparts K 

through M of this part under paragraphs 

(d)(1)(ii) of this section after the 

effective date must comply with the 

requirements of subparts K through M of 

this part beginning on April 1 of the 

year in which the national bank or 

Federal savings association becomes 

subject to the minimum stable funding 

standard and other requirements of 

subparts K through M of this part: and 

(iii) A national bank or Federal 

savings association that becomes subject 

to the minimum stable funding standard 

and other requirements of subparts K 

through M of this part under paragraph 

(d)(1)(iv) of this section after the 

effective date must comply with the 

requirements of subparts K through M of 

this part on the date specified by the 

OCC. 

(3) Subparts K through M do not 

apply to: 

(i) A bridge financial company as 

defined in 12 U.S.C. 5381(a)(3), or a 

subsidiary of a bridge financial 

company; or 

(ii) A new depository institution or a 

bridge depository institution, as defined 

in 12 U.S.C. 1813(i). 

(4) A national bank or Federal savings 

association subject to a minimum 

liquidity standard under this part shall 

remain subject until the OCC 

determines in writing that application of 

this part to the national bank or Federal 

savings association is not appropriate in 

light of the national bank’s or Federal 

savings association’s asset size, level of 

complexity, risk profile, scope of 

operations, affiliation with foreign or 

domestic covered entities, or risk to the 

financial system. 

(5) In making a determination under 

paragraphs (d)(1)(iv) or (d)(4) of this 

section, the OCC will apply, as 

appropriate, notice and response 

procedures in the same manner and to 

the same extent as the notice and 

response procedures set forth in 12 CFR 

3.404. 

■ 11. Add subpart M to part 50 to read 

as follows: 

Subpart M—Net stable funding ratio for 

certain national banks and Federal savings 

associations 

Sec. 

50.120 Applicability. 

50.121 Net stable funding ratio 

requirement. 

Subpart M—Net stable funding ratio for 

certain national banks and Federal 

savings associations 

§ 50.120 Applicability. 

(a) Scope. This subpart applies to a 

national bank or Federal savings 

association that: 

(1) Is a Category III national bank or 

Federal savings association that is a 

consolidated subsidiary of a depository 

institution holding company with less 

than $75 billion in average weighted 

short-term wholesale funding that is a 

Category III Board-regulated institution, 

pursuant to 12 CFR 249.3; or 

(2) Is a Category III national bank or 

Federal savings association with less 

than $75 billion in average weighted 

short-term wholesale funding that is not 

consolidated under a holding company. 

(b) Applicable provisions. Except as 

otherwise provided in this subpart, the 

provisions of subparts A, K, and L of 

this part apply to national banks and 

Federal savings associations that are 

subject to this subpart. 

(c) Applicability. A national bank or 

Federal savings association that meets 

the threshold for applicability of this 

subpart under paragraph (a) of this 

section after the effective date must 

comply with the requirements of this 

subpart beginning on the first day of the 

second calendar quarter after which it 

meets the threshold set forth in 

paragraph (a) of this section. 

§ 50.121 Net stable funding ratio 

requirement. 

(a) Calculation of the net stable 

funding ratio. A national bank or 

Federal savings association subject to 

this subpart must calculate and 

maintain a net stable funding ratio in 

accordance with § 50.100 and this 

subpart. 

(b) Available stable funding amount. 

A national bank or Federal savings 

association subject to this subpart must 

calculate its ASF amount in accordance 

with subpart K of this part. 

(c) Required stable funding amount. A 

national bank or Federal savings 

association subject to this subpart must 

calculate its RSF amount in accordance 

with subpart K of this part, provided, 

however, that the RSF amount of a 

national bank or Federal savings 

association subject to this subpart 

equals [70 to 85] percent of the RSF 

amount calculated in accordance with 

subpart K of this part. 

Board of Governors of the Federal 

Reserve System 

12 CFR CHAPTER II 

Authority and Issuance 

For the reasons set forth in the 

Supplementary Information, chapter II 

of title of the Code of Federal 

Regulations is proposed to be amended 

as follows: 

PART 217—CAPITAL ADEQUACY OF 

BANK HOLDING COMPANIES, 

SAVINGS AND LOAN HOLDING 

COMPANIES, AND STATE MEMBER 

BANKS (REGULATION Q) 

■ 12. The authority citation for part 217 

continues to read as follows: 

Authority: 12 U.S.C. 248(a), 321–338a, 

481–486, 1462a, 1467a, 1818, 1828, 1831n, 

1831o, 1831p–1, 1831w, 1835, 1844(b), 1851, 

3904, 3906–3909, 4808, 5365, 5368, 5371. 

■ 13. In § 217.2, revise the definition of 

Advanced approaches Board-regulated 

institution and add the definitions of 

Category II Board-regulated institution, 

Category III Board-regulated institution, 

FR Y–9LP, and FR Y–15 in alphabetical 

order to read as follows: 

§ 217.2 Definitions. 

* * * * * 

Advanced-approaches Boardregulated institution means: 

(1) A Board-regulated institution that 

is described § 217.100(b)(1); or 

(2) A U.S. intermediate holding 

company that was established or 

designated by a foreign banking 

organization pursuant to 12 CFR 

252.153 

(i) That: 

(A) Has total consolidated assets 

(excluding assets held by an insurance 

underwriting subsidiary), as defined on 

schedule HC–K of the FR Y–9C, equal 

to $250 billion or more; 

(B) Has consolidated total on-balance 

sheet foreign exposure on its most 

recent year-end Federal Financial 

Institutions Examination Council 

(FFIEC) 009 Report equal to $10 billion 

or more (where total on-balance sheet 


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foreign exposure equals total foreign 

countries cross-border claims on an 

ultimate-risk basis, plus total foreign 

countries claims on local residents on 

an ultimate-risk basis, plus total foreign 

countries fair value of foreign exchange 

and derivative products), calculated in 

accordance with the FFIEC 009 Country 

Exposure Report; or 

(C) Has a subsidiary depository 

institution that is required, or has 

elected, to use 12 CFR part 3, subpart E 

(OCC), 12 CFR part 217, subpart E 

(Board), or 12 CFR part 324, subpart E 

(FDIC) to calculate its risk-based capital 

requirements. 

(ii) Reserved. 

* * * * * 

Category II Board-regulated 

institution means: 

(1) A depository institution holding 

company that is identified as a Category 

II banking organization pursuant to 12 

CFR 252.5 or 12 CFR 238.10, as 

applicable; 

(2) A state member bank that is a 

subsidiary of a company identified in 

paragraph (1) of this definition; or 

(3) A state member bank that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $700 billion or more. If the state 

member bank has not filed the Call 

Report for each of the four most recent 

calendar quarters, total consolidated 

assets means the average of its total 

consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

of $100 billion or more but less than 

$700 billion. If the state member bank 

has not filed the Call Report for each of 

the four most recent quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; and 

(2) Cross-jurisdictional activity, 

calculated based on the average of its 

cross-jurisdictional activity for the four 

most recent calendar quarters, of $75 

billion or more. Cross-jurisdictional 

activity is the sum of crossjurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form. 

(ii) After meeting the criteria in 

paragraph (3)(i) of this section, a state 

member bank continues to be a Category 

II Board-regulated institution until the 

state member bank: 

(A) Has: 

(1) Less than $700 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; and 

(2) Less than $75 billion in crossjurisdictional activity for each of the 

four most recent calendar quarters. 

Cross-jurisdictional activity is the sum 

of cross-jurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(B) Has less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; or 

(C) Is a subsidiary of a global 

systemically important BHC. 

Category III Board-regulated 

institution means: 

(1) A depository institution holding 

company that is identified as a Category 

III banking organization pursuant to 12 

CFR 252.5 or 12 CFR 238.10, as 

applicable; 

(2) A state member bank that is a 

subsidiary of a company identified in 

paragraph (1) of this definition; or 

(3) A state member bank that: 

(i) (A) Has total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $250 billion or more. If the state 

member bank has not filed the Call 

Report for each of the four most recent 

calendar quarters, total consolidated 

assets means the average of its total 

consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

of $100 billion or more but less than 

$250 billion. If the state member bank 

has not filed the Call Report for each of 

the four most recent calendar quarters, 

total consolidated assets means the 

average of its total consolidated assets, 

as reported on the Call Report, for the 

most recent quarter or quarters, as 

applicable; and 

(2) At least one of the following, each 

calculated as the average of the four 

most recent calendar quarters, or if the 

state member bank has not filed each 

applicable reporting form for each of the 

four most recent calendar quarters, for 

the most recent quarter or quarters, as 

applicable: 

(i) Total nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

equal to $75 billion or more; 

(ii) Off-balance sheet exposure equal 

to $75 billion or more. Off-balance sheet 

exposure is a state member bank’s total 

exposure, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the state 

member bank, as reported on the Call 

Report; or 

(iii) Weighted short-term wholesale 

funding, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, equal to $75 

billion or more. 

(ii) After meeting the criteria in 

paragraph (3)(i) of this section, a state 

member bank continues to be a Category 

III Board-regulated institution until the 

state member bank: 

(A) Has: 

(1) Less than $250 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(2) Less than $75 billion in total 

nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

for each of the four most recent calendar 

quarters; 

(3) Less than $75 billion in weighted 

short-term wholesale funding, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, for each of 

the four most recent calendar quarters; 

and 

(4) Less than $75 billion in off-balance 

sheet exposure for each of the four most 

recent calendar quarters. Off-balance 

sheet exposure is a state member bank’s 

total exposure, calculated in accordance 

with the instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the state 

member bank, as reported on the Call 

Report; or 

(B) Has less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(C) Is a Category II Board-regulated 

institution; or 

(D) Is a subsidiary of a global 

systemically important BHC. 

FR Y–15 means the Banking 

Organization Systemic Risk Report. 

FR Y–9LP means the Parent Company 

Only Financial Statements for Large 

Holding Companies. 

* * * * * 

■ 14. In § 217.10, revise paragraphs 

(a)(5), (c) introductory text, and (c)(4)(i) 

introductory text to read as follows: 


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§ 217.10 Minimum capital requirements. 

(a) * * * 

(5) For advanced approaches Boardregulated institutions or, for Category III 

Board-regulated institutions, a 

supplementary leverage ratio of 3 

percent. 

* * * * * 

(c) Advanced approaches capital ratio 

calculations. An advanced approaches 

Board-regulated institution that has 

completed the parallel run process and 

received notification from the Board 

pursuant to § 217.121(d) must determine 

its regulatory capital ratios as described 

in paragraphs (c)(1) through (3) of this 

section. An advanced approaches 

Board-regulated institution must 

determine its supplementary leverage 

ratio in accordance with paragraph 

(c)(4) of this section, beginning with the 

calendar quarter immediately following 

the quarter in which the Boardregulated institution meets any of the 

criteria in § 217.100(b)(1). A Category III 

Board-regulated institution must 

determine its supplementary leverage 

ratio in accordance with paragraph 

(c)(4) of this section, beginning with the 

calendar quarter immediately following 

the quarter in which the Boardregulated institution is identified as a 

Category III Board-regulated institution. 

* * * * * 

(4) Supplementary leverage ratio. (i) 

An advanced approaches Boardregulated institution’s or a Category III 

Board-regulated institution’s 

supplementary leverage ratio is the ratio 

of its tier 1 capital to total leverage 

exposure, the latter which is calculated 

as the sum of: 

* * * * * 

■ 15. In § 217.11, revise paragraphs 

(b)(1) introductory text and (b)(1)(ii) as 

follows: 

§ 217.11 Capital conservation buffer, 

countercyclical capital buffer amount, and 

GSIB surcharge. 

* * * * * 

(b) Countercyclical capital buffer 

amount—(1) General. An advanced 

approaches Board-regulated institution 

or a Category III Board-regulated 

institution must calculate a 

countercyclical capital buffer amount in 

accordance with the following 

paragraphs for purposes of determining 

its maximum payout ratio under Table 

1 to § 217.11. 

(i) * * * 

(ii) Amount. An advanced approaches 

Board-regulated institution or a 

Category III Board-regulated institution 

has a countercyclical capital buffer 

amount determined by calculating the 

weighted average of the countercyclical 

capital buffer amounts established for 

the national jurisdictions where the 

Board-regulated institution’s private 

sector credit exposures are located, as 

specified in paragraphs (b)(2) and (3) of 

this section. 

* * * * * 

■ 16. In § 217.100, paragraph (b)(1) is 

revised to read as follows: 

§ 217.100 Purpose, applicability, and 

principle of conservatism. 

* * * * * 

(b) Applicability. (1) This subpart 

applies to: 

(i) A top-tier bank holding company 

or savings and loan holding company 

domiciled in the United States that: 

(A) Is not a consolidated subsidiary of 

another bank holding company or 

savings and loan holding company that 

uses 12 CFR part 217, subpart E, to 

calculate its risk-based capital 

requirements; and 

(B) That: 

(1) Is identified as a global 

systemically important BHC pursuant to 

12 CFR 217.402; 

(2) Is identified as a Category II 

banking organization pursuant to 12 

CFR 252.5 or 12 CFR 238.10; or 

(3) Has a subsidiary depository 

institution that is required, or has 

elected, to use 12 CFR part 3, subpart E 

(OCC), 12 CFR part 217, subpart E 

(Board), or 12 CFR part 324, subpart E 

(FDIC) to calculate its risk-based capital 

requirements; 

(ii) A state member bank that: 

(A) Is a subsidiary of a global 

systemically important BHC; 

(B) Is a Category II Board-regulated 

institution; 

(C) Is a subsidiary of a depository 

institution that uses 12 CFR part 3, 

subpart E (OCC), 12 CFR part 217, 

subpart E (Board), or 12 CFR part 324, 

subpart E (FDIC) to calculate its riskbased capital requirements; or 

(D) Is a subsidiary of a bank holding 

company or savings and loan holding 

company that uses 12 CFR part 217, 

subpart E, to calculate its risk-based 

capital requirements; or 

(iii) Any Board-regulated institution 

that elects to use this subpart to 

calculate its risk-based capital 

requirements. 

* * * * * 

■ 17. In § 217.406, paragraph (b)(2) 

introductory text is revised to read as 

follows: 

§ 217.406 Short-term wholesale funding 

score. 

* * * * * 

(b) * * * 

(2) Short-term wholesale funding 

includes the following components: 

* * * * * 

PART 249—LIQUIDITY RISK 

MEASUREMENT STANDARDS 

(REGULATION WW) 

■ 18. The authority citation for part 249 

continues to read as follows: 

Authority: 12 U.S.C. 248(a), 321–338a, 

481–486, 1467a(g)(1), 1818, 1828, 1831p–1, 

1831o–1, 1844(b), 5365, 5366, 5368. 

■ 19. In § 249.1, revise paragraphs (b)(1) 

and (2), and add paragraph (d) to read 

as follows: 

§ 249.1 Purpose and applicability. 

* * * * * 

(b) Applicability of Minimum 

Liquidity Standards. (1) A Boardregulated institution is subject to the 

minimum liquidity standard and other 

requirements of this part if: 

(i) It is a global systemically important 

BHC, a GSIB depository institution, a 

Category II Board-regulated institution, 

or a Category III Board-regulated 

institution; 

(ii) It is a covered intermediate 

holding company that: 

(A) Has total consolidated assets of 

$250 billion or more, as reported on the 

most recent year-end (as applicable): 

(1) Consolidated Financial Statements 

for Holding Companies reporting form 

(FR Y–9C), or, if the covered 

intermediate holding company is not 

required to report on the FR Y–9C, its 

estimated total consolidated assets as of 

the most recent year-end, calculated in 

accordance with the instructions to the 

FR Y–9C; or 

(2) Call Report; or 

(B) Has total consolidated on-balance 

sheet foreign exposure at the most 

recent year-end equal to $10 billion or 

more (where total on-balance sheet 

foreign exposure equals total crossborder claims less claims with a head 

office or guarantor located in another 

country plus redistributed guaranteed 

amounts to the country of the head 

office or guarantor plus local country 

claims on local residents plus 

revaluation gains on foreign exchange 

and derivative transaction products, 

calculated in accordance with the 

Federal Financial Institutions 

Examination Council (FFIEC) 009 

Country Exposure Report); 

(iii) It is a depository institution that 

is a consolidated subsidiary of a covered 

intermediate holding company 

described in paragraph (b)(1)(ii) of this 

section and has total consolidated assets 

equal to $10 billion or more, as reported 

on the most recent year-end Call Report; 

(iv) It is a covered nonbank company; 

(v) It is a covered intermediate 

holding company that meets the criteria 

in § 249.60(a) but does not meet the 

criteria in paragraph (b)(1)(ii) of this 


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section, and is subject to complying 

with the requirements of this part in 

accordance with subpart G of this part; 

or 

(vi) The Board has determined that 

application of this part is appropriate in 

light of the Board-regulated institution’s 

asset size, level of complexity, risk 

profile, scope of operations, affiliation 

with foreign or domestic covered 

entities, or risk to the financial system. 

(2)(i) A Board-regulated institution 

that becomes subject to the minimum 

liquidity standard and other 

requirements of this part under 

paragraph (b)(1)(i) of this section must 

comply with the requirements of this 

part beginning on the first day of the 

second calendar quarter after which the 

Board-regulated institution becomes 

subject to the minimum liquidity 

standard and other requirements of this 

part, except: 

(A) A Board-regulated institution 

must calculate and maintain a liquidity 

coverage ratio monthly, on each 

calculation date that is the last business 

day of the applicable calendar month, 

for the first three calendar quarters after 

the Board-regulated institution begins 

complying with the minimum liquidity 

standard and other requirements of this 

part; 

(B) Beginning one year after the first 

year in which the Board-regulated 

institution becomes subject to the 

minimum liquidity standard and other 

requirements of this part under 

paragraph (b)(1)(i) of this section, and 

thereafter, the Board-regulated 

institution must calculate and maintain 

a liquidity coverage ratio on each 

calculation date; 

(ii) A Board-regulated institution that 

becomes subject to the minimum 

liquidity standard and other 

requirements of this part under 

paragraphs (b)(1)(ii) or (b)(1)(iii) of this 

section after September 30, 2014, must 

comply with the requirements of this 

part beginning on April 1 of the year in 

which the Board-regulated institution 

becomes subject to the minimum 

liquidity standard and other 

requirements of this part, except: 

(A) From April 1 to December 31 of 

the year in which the Board-regulated 

institution becomes subject to the 

minimum liquidity standard and other 

requirements of this part, the Boardregulated institution must calculate and 

maintain a liquidity coverage ratio 

monthly, on each calculation date that 

is the last business day of the applicable 

calendar month; and 

(B) Beginning January 1 of the year 

after the first year in which the Boardregulated institution becomes subject to 

the minimum liquidity standard and 

other requirements of this part under 

paragraph (b)(1) of this section, and 

thereafter, the Board-regulated 

institution must calculate and maintain 

a liquidity coverage ratio on each 

calculation date; and 

(iii) A Board-regulated institution that 

becomes subject to the minimum 

liquidity standard and other 

requirements of this part under 

paragraph (b)(1)(vi) of this section after 

September 30, 2014, must comply with 

the requirements of this part subject to 

a transition period specified by the 

Board. 

* * * * * 

(d) Applicability of the minimum 

stable funding standard. (1) A Boardregulated institution is subject to the 

minimum stable funding standard and 

other requirements of subparts K 

through N if: 

(i) It is a global systemically important 

BHC, a GSIB depository institution, a 

Category II Board-regulated institution, 

or a Category III Board-regulated 

institution with $75 billion or more in 

average weighted short-term wholesale 

funding, 

(ii) It is a covered intermediate 

holding company that: 

(A) Has total consolidated assets of 

$250 billion or more, as reported on the 

most recent year-end (as applicable): 

(1) Consolidated Financial Statements 

for Holding Companies reporting form 

(FR Y–9C), or, if the covered 

intermediate holding company is not 

required to report on the FR Y–9C, its 

estimated total consolidated assets as of 

the most recent year end, calculated in 

accordance with the instructions to the 

FR Y–9C; or 

(2) Call Report; 

(B) Has total consolidated on-balance 

sheet foreign exposure at the most 

recent year-end equal to $10 billion or 

more (where total on-balance sheet 

foreign exposure equals total crossborder claims less claims with a head 

office or guarantor located in another 

country plus redistributed guaranteed 

amounts to the country of the head 

office or guarantor plus local country 

claims on local residents plus 

revaluation gains on foreign exchange 

and derivative transaction products, 

calculated in accordance with the 

Federal Financial Institutions 

Examination Council (FFIEC) 009 

Country Exposure Report); 

(iii) It is a depository institution that 

is: 

(A) A Category III Board-regulated 

institution; and 

(B) A consolidated subsidiary of a 

Category III Board-regulated institution 

with $75 billion or more in average 

weighted short-term wholesale funding; 

(iv) It is a depository institution that 

is a consolidated subsidiary of a covered 

intermediate holding company 

described in paragraph (d)(1)(ii) of this 

section and has total consolidated assets 

equal to $10 billion or more, as reported 

on the most recent year-end Call Report; 

(v) It is a covered nonbank company; 

(vi) It is a Category III Board-regulated 

institution or a covered intermediate 

holding company that meets the criteria 

in § 249.120(a) but does not meet the 

criteria in paragraphs (d)(1)(i) or (ii) of 

this section, and is subject to complying 

with the requirements of this part in 

accordance with subpart M of this part; 

or 

(vii) The Board has determined that 

application of this part is appropriate in 

light of the Board-regulated institution’s 

asset size, level of complexity, risk 

profile, scope of operations, affiliation 

with foreign or domestic covered 

entities, or risk to the financial system. 

(2)(i) A Board-regulated institution 

that becomes subject to the minimum 

stable funding standard and other 

requirements of subparts K through N of 

this part under paragraphs (d)(1)(i) or 

(d)(1)(iii) of this section after the 

effective date, must comply with the 

requirements of these subparts 

beginning on the first day of the second 

calendar quarter after which the Boardregulated institution becomes subject to 

the minimum stable funding standard 

and other requirements of this part. 

(ii) A Board-regulated institution that 

becomes subject to the minimum stable 

funding standard and other 

requirements of subparts K through N of 

this part under paragraphs (d)(1)(ii) or 

(d)(1)(iv) of this section after the 

effective date must comply with the 

requirements of subparts K through N of 

this part beginning on April 1 of the 

year in which the Board-regulated 

institution becomes subject to the 

minimum stable funding standard and 

requirements of subparts K through N of 

this part; and, 

(iii) A Board-regulated institution that 

becomes subject to the minimum stable 

funding standard and other 

requirements of subparts K through N of 

this part under paragraph (d)(1)(vii) of 

this section after the effective date must 

comply with the requirements of 

subparts K through N of this part on the 

date specified by the Board. 

(3) Subparts K through N do not apply 

to: 

(i) A bridge financial company as 

defined in 12 U.S.C. 5381(a)(3), or a 

subsidiary of a bridge financial 

company; or 

(ii) A new depository institution or a 

bridge depository institution, as defined 

in 12 U.S.C. 1813(i). 


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(4) A Board-regulated institution 

subject to a minimum stable funding 

standard under this part shall remain 

subject until the Board determines in 

writing that application of this part to 

the Board-regulated institution is not 

appropriate in light of the Boardregulated institution’s asset size, level of 

complexity, risk profile, scope of 

operations, affiliation with foreign or 

domestic covered entities, or risk to the 

financial system. 

(5) In making a determination under 

paragraphs (d)(1)(vii) or (d)(4) of this 

section, the Board will apply, as 

appropriate, notice and response 

procedures in the same manner and to 

the same extent as the notice and 

response procedures set forth in 12 CFR 

263.202. 

■ 20. In § 249.3, add the definitions of 

Average weighted short-term wholesale 

funding, Call Report, Category II Boardregulated institution, Category III Boardregulated institution, Covered 

intermediate holding company, FR 

Y–9LP, FR Y–15, Global systemically 

important BHC, and GSIB depository 

institution in alphabetical order to read 

as follows: 

§ 249.3 Definitions. 

* * * * * 

Average weighted short-term 

wholesale funding has the same 

meaning as in 12 CFR 252.2. 

* * * * * 

Call Report means the Consolidated 

Reports of Condition and Income. 

Category II Board-regulated 

institution means: 

(1) A covered depository institution 

holding company that is identified as a 

Category II banking organization 

pursuant to 12 CFR 252.5 or 12 CFR 

238.10; 

(2) A state member bank that is a 

consolidated subsidiary of a company 

described in paragraphs (1) or (3) and 

that has total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $10 billion or more. If the state 

member bank has not filed the Call 

Report for each of the four most recent 

calendar quarters, total consolidated 

assets means the average of its total 

consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable. After meeting 

the criteria under this paragraph (2), a 

state member bank continues to be a 

Category II Board-regulated institution 

until the state member bank has less 

than $10 billion in total consolidated 

assets, as reported on the Call Report, 

for each of the four most recent calendar 

quarters, or the state member bank is no 

longer a consolidated subsidiary of a 

company described in paragraphs (1) or 

(3); or 

(3) A state member bank that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $700 billion or more. If the state 

member bank has not filed the Call 

Report for each of the four most recent 

calendar quarters, total consolidated 

assets means the average of its total 

consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

of $100 billion or more but less than 

$700 billion. If the state member bank 

has not filed the Call Report for each of 

the four most recent calendar quarters, 

total consolidated assets means the 

average of its total consolidated assets, 

as reported on the Call Report, for the 

most recent quarter or quarters, as 

applicable; and 

(2) Cross-jurisdictional activity, 

calculated based on the average of its 

cross-jurisdictional activity for the four 

most recent calendar quarters, of $75 

billion or more. Cross-jurisdictional 

activity is the sum of crossjurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form. 

(ii) After meeting the criteria in 

paragraph (3)(i) of this section, a state 

member bank continues to be a Category 

II Board-regulated institution until the 

state member bank: 

(A)(1) Has less than $700 billion in 

total consolidated assets, as reported on 

the Call Report, for each of the four most 

recent calendar quarters; and 

(2) Has less than $75 billion in crossjurisdictional activity for each of the 

four most recent calendar quarters. 

Cross-jurisdictional activity is the sum 

of cross-jurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(B) Has less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; or 

(C) Is a GSIB depository institution. 

Category III Board-regulated 

institution means: 

(1) A covered depository institution 

holding company that is identified as a 

Category III banking organization 

pursuant to 12 CFR 252.5 or 12 CFR 

238.10, as applicable; 

(2) A state member bank that is a 

consolidated subsidiary of a company 

described in paragraphs (1) or (3) and 

that has total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets for the four most recent calendar 

quarters as reported on the Call Report, 

equal to $10 billion or more. If the state 

member bank has not filed the Call 

Report for each of the four most recent 

calendar quarters, total consolidated 

assets means the average of its total 

consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable. After meeting 

the criteria under this paragraph (2), a 

state member bank continues to be a 

Category III Board-regulated institution 

until the state member bank has less 

than $10 billion in total consolidated 

assets, as reported on the Call Report, 

for each of the four most recent calendar 

quarters, or the state member bank is no 

longer a consolidated subsidiary of a 

company described in paragraphs (1) or 

(3); or 

(3) A state member bank that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets in the four most recent quarters 

as reported quarterly on the most recent 

Call Report, equal to $250 billion or 

more. If the state member bank has not 

filed the Call Report for each of the four 

most recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

state member bank’s total consolidated 

assets in the four most recent calendar 

quarters as reported quarterly on the 

most recent Call Report, of $100 billion 

or more but less than $250 billion. If the 

state member bank has not filed the Call 

Report for each of the four most recent 

calendar quarters, total consolidated 

assets means the average of its total 

consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable; and 

(2) One or more of the following, each 

measured as the average of the four most 

recent calendar quarters, or if the state 

member bank has not filed the FR 

Y–9LP or equivalent reporting form, 

Call Report, or FR Y–15 or equivalent 

reporting form, as applicable, for each of 

the four most recent calendar quarters, 

for the most recent quarter or quarters, 

as applicable: 


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(i) Total nonbank assets, calculated in 

accordance with instructions to the FR 

Y–9LP or equivalent reporting form, 

equal to $75 billion or more; 

(ii) Off-balance sheet exposure, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the state 

member bank, as reported on the Call 

Report, equal to $75 billion or more; or 

(iii) Weighted short-term wholesale 

funding, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, equal to $75 

billion or more. 

(ii) After meeting the criteria in 

paragraph (3)(i) of this section, a state 

member bank continues to be a Category 

III Board-regulated institution until the 

state member bank: 

(A)(1) Has less than $250 billion in 

total consolidated assets, as reported on 

the Call Report, for each of the four most 

recent calendar quarters; 

(2) Has less than $75 billion in total 

nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

for each of the four most recent calendar 

quarters; 

(3) Has less than $75 billion in 

weighted short-term wholesale funding, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, for each of 

the four most recent calendar quarters; 

and 

(4) Has less than $75 billion in offbalance sheet exposure for each of the 

four most recent calendar quarters. Offbalance sheet exposure is a state 

member bank’s total exposure, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the state 

member bank, as reported on the Call 

Report; or 

(B) Has less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(C) Is a Category II Board-regulated 

institution; or 

(D) Is a GSIB depository institution. 

* * * * * 

Covered intermediate holding 

company means a U.S. intermediate 

holding company that: (1) Was 

established or designated by a foreign 

banking organization pursuant to 12 

CFR 252.153; and 

(2) Is a covered depository institution 

holding company. 

* * * * * 

FR Y–15 means the Banking 

Organization Systemic Risk Report. 

FR Y–9LP means the Parent Company 

Only Financial Statements for Large 

Holding Companies. 

* * * * * 

Global systemically important BHC 

means a bank holding company 

identified as a global systemically 

important BHC pursuant to 12 CFR 

217.402. 

GSIB depository institution means a 

depository institution that is a 

consolidated subsidiary of a global 

systemically important BHC and has 

total consolidated assets equal to $10 

billion or more, calculated based on the 

average of the depository institution’s 

total consolidated assets for the four 

most recent calendar quarters as 

reported on the Call Report. If the 

depository institution has not filed the 

Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

calendar quarter or quarters, as 

applicable. After meeting the criteria 

under this definition, a depository 

institution continues to be a GSIB 

depository institution until the 

depository institution has less than $10 

billion in total consolidated assets, as 

reported on the Call Report, for each of 

the four most recent calendar quarters, 

or the depository institution is no longer 

a consolidated subsidiary of a global 

systemically important BHC. 

* * * * * 

■ 21. In § 249.30, revise paragraph (a), 

and add paragraph (c) to read as follows: 

§ 249.30 Total net cash outflow amount. 

(a) Calculation of total net cash 

outflow amount. As of the calculation 

date, a Board-regulated institution’s 

total net cash outflow amount equals the 

Board-regulated institution’s outflow 

adjustment percentage as determined 

under paragraph (c) of this section 

multiplied by: 

(1) The sum of the outflow amounts 

calculated under § 249.32(a) through (l); 

minus 

(2) The lesser of: 

(i) The sum of the inflow amounts 

calculated under § 249.33(b) through (g); 

and 

(ii) 75 percent of the amount 

calculated under paragraph (a)(1) of this 

section; plus 

(3) The maturity mismatch add-on as 

calculated under paragraph (b) of this 

section. 

* * * * * 

(c) Outflow adjustment percentage. A 

Board-regulated institution’s outflow 

adjustment percentage is determined 

pursuant to Table 1 to § 249.30. 

TABLE 1 TO § 249.30—OUTFLOW ADJUSTMENT PERCENTAGES

Outflow adjustment 

percentage 

Global systemically important BHC or GSIB depository institution ......................................................................................... 100 

Category II Board-regulated institution .................................................................................................................................... 100 

Category III Board-regulated institution with $75 billion or more in average weighted short-term wholesale funding and 

any Category III Board-regulated institution that is a consolidated subsidiary of such a Category III Board-regulated institution ................................................................................................................................................................................. 100 

Category III Board-regulated institution with less than $75 billion in average weighted short-term wholesale funding and 

any Category III Board-regulated institution that is a consolidated subsidiary of such a Category III Board-regulated institution ................................................................................................................................................................................. [70 to 85] 

Covered intermediate holding company that meets the criteria under § 249.1(b)(1)(ii) and any Board-regulated institution 

subject to this part that is a consolidated subsidiary of such a covered intermediate holding company 1 ......................... 100 

1 Covered intermediate holding companies shall remain subject to this part as in effect on October 3, 2018, until the Board amends the liquidity 

risk measurement standards applicable to the subsidiaries of foreign banking organizations in effect on October 31, 2018. 

■ 22. Section 249.60, is revised to read 

as follows: 

§ 249.60 Applicability. 

(a) Scope. This subpart applies to a 

covered intermediate holding company 

that has total consolidated assets equal 

to $50 billion or more, based on the 

average of the Board-regulated 

institution’s four most recent FR Y–9Cs 


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1Under the proposed rule to implement the net 

stable funding ratio (NSFR), the RSF amount of a 

Board-regulated institution that is a covered 

intermediate holding company subject to this part 

would have equaled 70 percent of the RSF amount 

calculated in accordance with subpart K of this 

part. Upon adoption of the final NSFR rule, covered 

intermediate holding companies would remain 

subject to this part as proposed in June 1, 2016, 

until the Board adopts regulations that directly 

relate to the application of liquidity risk 

measurement and net stable funding standards to 

foreign banking organizations. 

and does not meet the applicability 

criteria set forth in § 249.1(b)(1)(ii). 

(b) Applicable provisions. Except as 

otherwise provided in this subpart, the 

provisions of subparts A through E of 

this part apply to covered intermediate 

holding companies that are subject to 

this subpart. 

(c) Applicability. Subject to the 

transition periods set forth in § 249.61, 

a Board-regulated institution that first 

meets the threshold for applicability of 

this subpart under paragraph (a) of this 

section after September 30, 2014, must 

comply with the requirements of this 

subpart one year after the date it meets 

the threshold set forth in paragraph (a) 

of this section; except that a Boardregulated institution that met the 

applicability criteria in § 249.1(b) 

immediately prior to meeting this 

threshold must comply with the 

requirements of this subpart beginning 

on the first day of the first quarter after 

which it meets the threshold set forth in 

paragraph (a) of this section. 

■ 23. In § 249.90, paragraph (b)(3) is 

revised to read as follows: 

§ 249.90 Timing, method and retention of 

disclosures. 

* * * * * 

(b) * * * 

(3) A covered depository institution 

holding company or covered nonbank 

company that is subject to the minimum 

liquidity standard and other 

requirements of this part pursuant to 

§ 249.1(b)(2)(i) or (ii) must provide the 

disclosures required by this subpart for 

the first calendar quarter beginning no 

later than the date it is first required to 

comply with the requirements of this 

part pursuant to § 249.1(b)(2)(i) or (ii). 

* * * * * 

■ 24. Add subpart M to part 249 to read 

as follows: 

Subpart M—Net stable funding ratio for 

certain Board-regulated institutions 

Sec. 

249.120 Applicability. 

249.121 Net stable funding ratio 

requirement. 

Subpart M—Net stable funding ratio for 

certain Board-regulated institutions 

§ 249.120 Applicability. 

(a) Scope. This subpart applies to: 

(1) A Category III Board-regulated 

institution with less than $75 billion in 

average weighted short-term wholesale 

funding; 

(2) A depository institution that is: 

(i) A consolidated subsidiary of a 

Category III Board-regulated institution 

described in (a)(1) of this section; and 

(ii) A Category III Board-regulated 

institution. 

(3) A covered intermediate holding 

company that has total consolidated 

assets equal to $50 billion or more, 

based on the average of the covered 

intermediate holding company’s total 

consolidated assets in the four most 

recent quarters as reported on the FR Y– 

9C and does not meet the applicability 

criteria set forth in § 249.1(d). 

(b) Applicable provisions. Except as 

otherwise provided in this subpart, the 

provisions of subparts A, K, L, and N of 

this part apply to Board-regulated 

institutions that are subject to this 

subpart. 

(c) Applicability. 

(1) A Board-regulated institution that 

meets the threshold for applicability of 

this subpart under paragraphs (a)(1) or 

(2) of this section after the effective date 

must comply with the requirements of 

this subpart beginning on the first day 

of the second calendar quarter after 

which it meets the thresholds set forth 

in paragraph (a) of this section. 

(2) A Board-regulated institution that 

meets the threshold for applicability of 

this subpart under paragraph (a)(3) of 

this section after the effective date must 

comply with the requirements of this 

subpart beginning one year after the 

date it meets the threshold set forth in 

paragraph (a) of this section. 

§ 249.121 Net stable funding ratio 

requirement. 

(a) Calculation of the net stable 

funding ratio. A Board-regulated 

institution subject to this subpart must 

calculate and maintain a net stable 

funding ratio in accordance with 

§ 249.100 and this subpart. 

(b) Available stable funding amount. 

A Board-regulated institution subject to 

this subpart must calculate its ASF 

amount in accordance with subpart K of 

this part. 

(c) Required stable funding amount. A 

Board-regulated institution subject to 

this subpart must calculate its RSF 

amount in accordance with subpart K of 

this part, provided, however, that the 

RSF amount of a Board-regulated 

institution subject to this subpart equals 

[70 to 85] percent of the RSF amount 

calculated in accordance with subpart K 

of this part.1

Federal Deposit Insurance Corporation 

12 CFR CHAPTER III 

For the reasons set out in the joint 

preamble, the FDIC proposes to amend 

12 CFR chapter III as follows. 

PART 324—CAPITAL ADEQUACY OF 

FDIC-SUPERVISED INSTITUTIONS 

■ 25. The authority citation for part 324 

continues to read as follows: 

Authority: 12 U.S.C. 1815(a), 1815(b), 

1816, 1818(a), 1818(b), 1818(c), 1818(t), 

1819(Tenth), 1828(c), 1828(d), 1828(i), 

1828(n), 1828(o), 1831o, 1835, 3907, 3909, 

4808; 5371; 5412; Pub. L. 102–233, 105 Stat. 

1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. 

L. 102–242, 105 Stat. 2236, 2355, as amended 

by Pub. L. 103–325, 108 Stat. 2160, 2233 (12 

U.S.C. 1828 note); Pub. L. 102–242, 105 Stat. 

2236, 2386, as amended by Pub. L. 102–550, 

106 Stat. 3672, 4089 (12 U.S.C. 1828 note); 

Pub. L. 111–203, 124 Stat. 1376, 1887 (15 

U.S.C. 78o–7 note). 

■ 26. In § 324.2, add the definitions of 

Category II FDIC-supervised institution 

and Category III FDIC-supervised 

institution, FR Y–9LP, and FR Y–15 in 

alphabetical order to read as follows: 

§ 324.2 Definitions. 

* * * * * 

Category II FDIC-supervised 

institution means: 

(1) An FDIC-supervised institution 

that is a subsidiary of a depository 

institution holding company that is 

identified as a Category II banking 

organization pursuant to 12 CFR 252.5 

or 12 CFR 238.10, as applicable; or 

(2) An FDIC-supervised institution 

that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets for the four most 

recent calendar quarters as reported on 

the Consolidated Report of Condition 

and Income (Call Report), equal to $700 

billion or more. If the FDIC-supervised 

institution has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets for the four most 

recent calendar quarters as reported on 

the Call Report, of $100 billion or more 

but less than $700 billion. If the FDICsupervised institution has not filed the 

Call Report for each of the four most 

recent quarters, total consolidated assets 

means the average of its total 


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consolidated assets, as reported on the 

Call Report, for the most recent quarter 

or quarters, as applicable; and 

(2) Cross-jurisdictional activity, 

calculated based on the average of its 

cross jurisdictional activity for the four 

most recent calendar quarters, of $75 

billion or more. Cross-jurisdictional 

activity is the sum of crossjurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(ii) After meeting the criteria in 

paragraph (2)(i) of this section, an FDICsupervised institution continues to be a 

Category II FDIC-supervised institution 

until the FDIC-supervised institution: 

(A) Has: 

(1) Less than $700 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; and 

(2) Less than $75 billion in crossjurisdictional activity for each of the 

four most recent calendar quarters. 

Cross-jurisdictional activity is the sum 

of cross-jurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(B) Has less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; or 

(C) Is a subsidiary of a global 

systemically important BHC pursuant to 

12 CFR 217.402. 

Category III FDIC-supervised 

institution means: 

(1) An FDIC-supervised institution 

that is a subsidiary of a depository 

institution holding company that is 

identified as a Category III banking 

organization pursuant to 12 CFR 252.5 

or 12 CFR 238.10, as applicable; or 

(2) An FDIC-supervised institution 

that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets for the four most 

recent calendar quarters as reported on 

the Call Report, equal to $250 billion or 

more. If the FDIC-supervised institution 

has not filed the Call Report for each of 

the four most recent calendar quarters, 

total consolidated assets means the 

average of its total consolidated assets, 

as reported on the Call Report, for the 

most recent quarter or quarters, as 

applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets for the four most 

recent calendar quarters as reported on 

the Call Report, of $100 billion or more 

but less than $250 billion. If the FDICsupervised institution has not filed the 

Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; and 

(2) At least one of the following, each 

calculated as the average of the four 

most recent calendar quarters, or if the 

FDIC-supervised institution has not 

filed each applicable reporting form for 

each of the four most recent calendar 

quarters, for the most recent quarter or 

quarters, as applicable: 

(i) Total nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

equal to $75 billion or more; 

(ii) Off-balance sheet exposure equal 

to $75 billion or more. Off-balance sheet 

exposure is an FDIC-supervised 

institution’s total exposure, calculated 

in accordance with the instructions to 

the FR Y–15 or equivalent reporting 

form, minus the total consolidated 

assets of the FDIC-supervised 

institution, as reported on the Call 

Report; or 

(iii) Weighted short-term wholesale 

funding, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, equal to $75 

billion or more. 

(ii) After meeting the criteria in 

paragraph (2)(i) of this section, an FDICsupervised institution continues to be a 

Category III FDIC-supervised institution 

until the FDIC-supervised institution: 

(A) Has: 

(1) Less than $250 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(2) Less than $75 billion in total 

nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

for each of the four most recent calendar 

quarters; 

(3) Less than $75 billion in weighted 

short-term wholesale funding, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, for each of 

the four most recent calendar quarters; 

and 

(4) Less than $75 billion in off-balance 

sheet exposure for each of the four most 

recent calendar quarters. Off-balance 

sheet exposure is a FDIC-supervised 

institution’s total exposure, calculated 

in accordance with the instructions to 

the FR Y–15 or equivalent reporting 

form, minus the total consolidated 

assets of the FDIC-supervised 

institution, as reported on the Call 

Report; or 

(B) Has Less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(C) Is a Category II FDIC-supervised 

institution; or 

(D) Is a subsidiary of a global 

systemically important BHC pursuant to 

12 CFR 217.402. 

* * * * * 

FR Y–15 means the Banking 

Organization Systemic Risk Report. 

FR Y–9LP means the Parent Company 

Only Financial Statements for Large 

Holding Companies. 

* * * * * 

■ 27. In § 324.10, revise paragraphs 

(a)(5), (c), and (c)(4)(i) introductory text 

to read as follows: 

§ 324.10 Minimum capital requirements. 

(a) * * * 

(5) For advanced approaches FDICsupervised institutions or, for Category 

III FDIC-supervised institutions, a 

supplementary leverage ratio of 3 

percent. 

* * * * * 

(c) Advanced approaches capital ratio 

calculations. An advanced approaches 

FDIC-supervised institution that has 

completed the parallel run process and 

received notification from the FDIC 

pursuant to § 324.121(d) must determine 

its regulatory capital ratios as described 

in paragraphs (c)(1) through (3) of this 

section. An advanced approaches FDICsupervised institution must determine 

its supplementary leverage ratio in 

accordance with paragraph (c)(4) of this 

section, beginning with the calendar 

quarter immediately following the 

quarter in which the FDIC-supervised 

institution meets any of the criteria in 

§ 324.100(b)(1). A Category III FDICsupervised institution must determine 

its supplementary leverage ratio in 

accordance with paragraph (c)(4) of this 

section, beginning with the calendar 

quarter immediately following the 

quarter in which the FDIC-supervised 

institution is identified as a Category III 

FDIC-supervised institution. 

* * * * * 

(4) Supplementary leverage ratio. (i) 

An advanced approaches FDICsupervised institution’s or a Category III 

FDIC-supervised institution’s 

supplementary leverage ratio is the ratio 

of its tier 1 capital to total leverage 

exposure, the latter which is calculated 

as the sum of: 

* * * * * 

■ 28. In § 324.11, revise paragraphs 

(b)(1) and (b)(1)(ii) as follows: 

§ 324.11 Capital conservation buffer and 

countercyclical capital buffer amount. 

* * * * * 


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(b) Countercyclical capital buffer 

amount—(1) General. An advanced 

approaches FDIC-supervised institution 

or a Category III FDIC-supervised 

institution must calculate a 

countercyclical capital buffer amount in 

accordance with the following 

paragraphs for purposes of determining 

its maximum payout ratio under Table 

1 to § 324.11. 

* * * * * 

(ii) Amount. An advanced approaches 

FDIC-supervised institution or a 

Category III FDIC-supervised institution 

has a countercyclical capital buffer 

amount determined by calculating the 

weighted average of the countercyclical 

capital buffer amounts established for 

the national jurisdictions where the 

FDIC-supervised institution’s private 

sector credit exposures are located, as 

specified in paragraphs (b)(2) and (3) of 

this section. 

* * * * * 

■ 29. In § 324.100, paragraph (b)(1) is 

revised to read as follows: 

§ 324.100 Purpose, applicability, and 

principle of conservatism. 

* * * * * 

(b) Applicability. (1) This subpart 

applies to an FDIC-supervised 

institution that: 

(i) Is a subsidiary of a global 

systemically important BHC pursuant to 

12 CFR 217.402; 

(ii) Is a Category II FDIC-supervised 

institution; 

(iii) Is a subsidiary of a depository 

institution that uses 12 CFR part 3, 

subpart E (OCC), 12 CFR part 217, 

subpart E (Board), or 12 CFR part 324, 

subpart E (FDIC) to calculate its riskbased capital requirements; 

(iv) Is a subsidiary of a bank holding 

company or savings and loan holding 

company that uses 12 CFR part 217, 

subpart E, to calculate its risk-based 

capital requirements; or 

(v) Elects to use this subpart to 

calculate its total risk-weighted assets. 

* * * * * 

PART 329—LIQUIDITY RISK 

MEASUREMENT STANDARDS 

■ 30. The authority citation for part 329 

continues to read as follows: 

Authority: 12 U.S.C. 1815, 1816, 1818, 

1819, 1828, 1831p–1, 5412. 

■ 31. In § 329.1, paragraphs (b)(1) and 

(2) are revised to read as follows: 

§ 329.1 Purpose and applicability. 

* * * * * 

(b) Applicability of Minimum 

Liquidity Standards. (1) An FDICsupervised institution is subject to the 

minimum liquidity standard and other 

requirements of this part if: 

(i) It is a GSIB FDIC-supervised 

institution, Category II FDIC-supervised 

institution or a Category III FDICsupervised institution; 

(ii) It is an FDIC-supervised 

institution that has total consolidated 

assets equal to $10 billion or more, as 

reported on the most recent year-end 

Call Report, and it is a consolidated 

subsidiary of a covered intermediate 

holding company that: 

(A) Has total consolidated assets of 

$250 billion or more, as reported on the 

most recent year-end (as applicable): 

(1) Consolidated Financial Statements 

for Holding Companies reporting form 

(FR Y–9C), or, if the covered 

intermediate holding company is not 

required to report on the FR Y–9C, its 

estimated total consolidated assets as of 

the most recent year end, calculated in 

accordance with the instructions to the 

FR Y–9C; or 

(2) Call Report; or 

(B) Has total consolidated on-balance 

sheet foreign exposure at the most 

recent year-end equal to $10 billion or 

more (where total on-balance sheet 

foreign exposure equals total crossborder claims less claims with a head 

office or guarantor located in another 

country plus redistributed guaranteed 

amounts to the country of the head 

office or guarantor plus local country 

claims on local residents plus 

revaluation gains on foreign exchange 

and derivative transaction products, 

calculated in accordance with the 

Federal Financial Institutions 

Examination Council (FFIEC) 009 

Country Exposure Report); or 

(iii) It is an FDIC-supervised 

institution for which the FDIC has 

determined that application of this part 

is appropriate in light of the FDICsupervised institution’s asset size, level 

of complexity, risk profile, scope of 

operations, affiliation with foreign or 

domestic covered entities, or risk to the 

financial system. 

(2)(i) An FDIC-supervised institution 

that becomes subject to the minimum 

liquidity standard and other 

requirements of this part under 

paragraph (b)(1)(i) of this section must 

comply with the requirements of this 

part beginning on the first day of the 

second calendar quarter after which the 

FDIC-supervised institution becomes 

subject to the minimum liquidity 

standard and other requirements of this 

part, except: 

(A) An FDIC-supervised institution 

must calculate and maintain a liquidity 

coverage ratio monthly, on each 

calculation date that is the last business 

day of the applicable calendar month, 

for the first three calendar quarters after 

the FDIC-supervised institution begins 

complying with the minimum liquidity 

standard and other requirements of this 

part; 

(B) Beginning one year after the first 

year in which the FDIC-supervised 

institution becomes subject to the 

minimum liquidity standard and other 

requirements of this part under 

paragraph (b)(1)(i) of this section, and 

thereafter, the FDIC-supervised 

institution must calculate and maintain 

a liquidity coverage ratio on each 

calculation date; 

(ii) An FDIC-supervised institution 

that becomes subject to the minimum 

liquidity standard and other 

requirements of this part under 

paragraph (b)(1)(ii) of this section after 

September 30, 2014, must comply with 

the requirements of this part beginning 

on April 1 of the year in which the 

FDIC-supervised institution becomes 

subject to the minimum liquidity 

standard and other requirements of this 

part, except: 

(A) From April 1 to December 31 of 

the year in which the FDIC-supervised 

institution becomes subject to the 

minimum liquidity standard and other 

requirements of this part, the FDICsupervised institution must calculate 

and maintain a liquidity coverage ratio 

monthly, on each calculation date that 

is the last business day of the applicable 

calendar month; and 

(B) Beginning January 1 of the year 

after the first year in which the FDICsupervised institution becomes subject 

to the minimum liquidity standard and 

other requirements of this part under 

paragraph (b)(1) of this section, and 

thereafter, the FDIC-supervised 

institution must calculate and maintain 

a liquidity coverage ratio on each 

calculation date; and 

(iii) An FDIC-supervised institution 

that becomes subject to the minimum 

liquidity standard and other 

requirements of this part under 

paragraph (b)(1)(iii) of this section after 

September 30, 2014, must comply with 

the requirements of this part subject to 

a transition period specified by the 

FDIC. 

* * * * * 

■ 32. In § 329.3, add the definitions of 

Average weighted short-term wholesale 

funding, Call Report, Category II Boardregulated institution, Category III Boardregulated institution, Covered 

intermediate holding company, FR Y– 

9LP, FR Y–15, Global systemically 

important BHC, and GSIB FDICsupervised institution in alphabetical 

order to read as follows: 


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§ 329.3 Definitions. 

* * * * * 

Average weighted short-term 

wholesale funding has the same 

meaning as in 12 CFR 252.2. 

* * * * * 

Call Report means the Consolidated 

Reports of Condition and Income. 

Category II FDIC-supervised 

institution means: 

(1) An FDIC-supervised institution 

that is a consolidated subsidiary of a 

company that is identified as a Category 

II banking organization pursuant to 12 

CFR 252.5 or 12 CFR 238.10 and has 

total consolidated assets, calculated 

based on the average of the FDICsupervised institution’s total 

consolidated assets for the four most 

recent calendar quarters as reported on 

the Call Report, equal to $10 billion or 

more. If the FDIC-supervised institution 

has not filed the Call Report for each of 

the four most recent calendar quarters, 

total consolidated assets means the 

average of its total consolidated assets, 

as reported on the Call Report, for the 

most recent quarter or quarters, as 

applicable. After meeting the criteria 

under this paragraph (1), an FDICsupervised institution continues to be a 

Category II FDIC-supervised institution 

until the FDIC-supervised institution 

has less than $10 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters, or the FDICsupervised institution is no longer a 

consolidated subsidiary of a Category II 

banking organization pursuant to 12 

CFR 252.5 or 12 CFR 238.10; or 

(2) An FDIC-supervised institution 

that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets for the four most 

recent calendar quarters as reported on 

the Consolidated Report of Condition 

and Income (Call Report), equal to $700 

billion or more. If the FDIC-supervised 

institution has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets for the four most 

recent calendar quarters as reported on 

the Call Report, of $100 billion or more 

but less than $700 billion. If the FDICsupervised institution has not filed the 

Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; and 

(2) Cross-jurisdictional activity, 

calculated based on the average of its 

cross-jurisdictional activity for the four 

most recent calendar quarters, of $75 

billion or more. Cross-jurisdictional 

activity is the sum of crossjurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(ii) After meeting the criteria in 

paragraph (2)(i) of this section, an FDICsupervised institution continues to be a 

Category II FDIC-supervised institution 

until the FDIC-supervised institution 

has: 

(A)(1) Less than $700 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; and 

(2) Less than $75 billion in crossjurisdictional activity for each of the 

four most recent calendar quarters. 

Cross-jurisdictional activity is the sum 

of cross-jurisdictional claims and crossjurisdictional liabilities, calculated in 

accordance with the instructions to the 

FR Y–15 or equivalent reporting form; 

(B) Less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; or 

(C) Is a GSIB FDIC-supervised 

institution. 

Category III FDIC-supervised 

institution means: 

(1) An FDIC-supervised institution 

that is a consolidated subsidiary of a 

company that is identified as a Category 

III banking organization pursuant to 12 

CFR 252.5 or 12 CFR 238.10, as 

applicable and has total consolidated 

assets, calculated based on the average 

of the FDIC-supervised institution’s 

total consolidated assets for the four 

most recent calendar quarters as 

reported on the Call Report, equal to $10 

billion or more. If the FDIC-supervised 

institution has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable. After meeting the criteria 

under this paragraph (1), an FDICsupervised institution continues to be a 

Category III FDIC-supervised institution 

until the FDIC-supervised institution 

has less than $10 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters, or the FDICsupervised institution is no longer a 

consolidated subsidiary of a Category III 

banking organization pursuant to 12 

CFR 252.5 or 12 CFR 238.10; or 

(2) An FDIC-supervised institution 

that: 

(i)(A) Has total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets in the four most 

recent quarters as reported quarterly on 

the most recent Call Report, equal to 

$250 billion or more. If the FDICsupervised institution has not filed the 

Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

quarter or quarters, as applicable; or 

(B) Has: 

(1) Total consolidated assets, 

calculated based on the average of the 

FDIC-supervised institution’s total 

consolidated assets in the four most 

recent calendar quarters as reported 

quarterly on the most recent Call Report, 

of at least $100 billion but less than 

$250 billion. If the FDIC-supervised 

institution has not filed the Call Report 

for each of the four most recent calendar 

quarters, total consolidated assets means 

the average of its total consolidated 

assets, as reported on the Call Report, 

for the most recent quarter or quarters, 

as applicable; and 

(2) One or more of the following, each 

measured as the average of the four most 

recent quarters, or if the FDICsupervised institution has not filed each 

applicable reporting form for each of the 

four most recent calendar quarters, for 

the most recent quarter or quarters, as 

applicable: 

(i) Total nonbank assets, calculated in 

accordance with instructions to the FR 

Y–9LP or equivalent reporting form, 

equal to $75 billion or more; 

(ii) Off-balance sheet exposure, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, minus the 

total consolidated assets of the FDICsupervised institution, as reported on 

the Call Report, equal to $75 billion or 

more; or 

(iii) Weighted short-term wholesale 

funding, calculated in accordance with 

the instructions to the FR Y–15 or 

equivalent reporting form, equal to $75 

billion or more; 

(ii) After meeting the criteria in 

paragraph (2)(i) of this section, an FDICsupervised institution continues to be a 

Category III FDIC-supervised institution 

until the FDIC-supervised institution 

has: 

(A)(1) Less than $250 billion in total 

consolidated assets, as reported on the 


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Call Report, for each of the four most 

recent calendar quarters; 

(2) Less than $75 billion in total 

nonbank assets, calculated in 

accordance with the instructions to the 

FR Y–9LP or equivalent reporting form, 

for each of the four most recent calendar 

quarters; 

(3) Less than $75 billion in weighted 

short-term wholesale funding, 

calculated in accordance with the 

instructions to the FR Y–15 or 

equivalent reporting form, for each of 

the four most recent calendar quarters; 

and 

(4) Less than $75 billion in off-balance 

sheet exposure for each of the four most 

recent calendar quarters. Off-balance 

sheet exposure is an FDIC-supervised 

institution’s total exposure, calculated 

in accordance with the instructions to 

the FR Y–15 or equivalent reporting 

form, minus the total consolidated 

assets of the FDIC-supervised 

institution, as reported on the Call 

Report; or 

(B) Less than $100 billion in total 

consolidated assets, as reported on the 

Call Report, for each of the four most 

recent calendar quarters; 

(C) Is a Category II FDIC-supervised 

institution; or 

(D) Is a GSIB FDIC-supervised 

institution. 

* * * * * 

Covered intermediate holding 

company means a U.S. intermediate 

holding company that: (1) Was 

established or designated by a foreign 

banking organization pursuant to 12 

CFR 252.153; and 

(2) Is a bank holding company or 

savings and loan holding company. 

* * * * * 

FR Y–15 means the Banking 

Organization Systemic Risk Report. 

FR Y–9LP means the Parent Company 

Only Financial Statements for Large 

Holding Companies. 

* * * * * 

Global systemically important BHC 

means a bank holding company 

identified as a global systemically 

important BHC pursuant to 12 CFR 

217.402. 

GSIB FDIC-supervised institution 

means an FDIC-supervised institution 

that is a consolidated subsidiary of a 

global systemically important BHC and 

has total consolidated assets equal to 

$10 billion or more, calculated based on 

the average of the depository 

institution’s total consolidated assets for 

the four most recent calendar quarters as 

reported on the Call Report. If the FDICsupervised institution has not filed the 

Call Report for each of the four most 

recent calendar quarters, total 

consolidated assets means the average of 

its total consolidated assets, as reported 

on the Call Report, for the most recent 

calendar quarter or quarters, as 

applicable. After meeting the criteria 

under this definition, an FDICsupervised institution continues to be a 

GSIB FDIC-supervised institution until 

the depository institution has less than 

$10 billion in total consolidated assets, 

as reported on the Call Report, for each 

of the four most recent calendar 

quarters, or the FDIC-supervised 

institution is no longer a consolidated 

subsidiary of a global systemically 

important BHC. 

* * * * * 

■ 33. In § 329.30, paragraph (a) is 

revised to read as follows: 

§ 329.30 Total net cash outflow amount. 

(a) Calculation of total net cash 

outflow amount. As of the calculation 

date, an FDIC-supervised institution’s 

total net cash outflow amount equals the 

FDIC-supervised institution’s outflow 

adjustment percentage as determined 

under paragraph (c) of this section 

multiplied by: 

(1) The sum of the outflow amounts 

calculated under § 329.32(a) through (l); 

minus 

(2) The lesser of: 

(i) The sum of the inflow amounts 

calculated under § 329.33(b) through (g); 

and 

(ii) 75 percent of the amount 

calculated under paragraph (a)(1) of this 

section; plus 

(3) The maturity mismatch add-on as 

calculated under paragraph (b) of this 

section. 

* * * * * 

■ 34. In § 329.30, paragraph (c) is added 

to read as follows: 

(c) Outflow adjustment percentage. A 

FDIC-supervised institution’s outflow 

adjustment percentage is determined 

pursuant to Table 1 to § 329.30. 

TABLE 1 TO § 329.30—OUTFLOW ADJUSTMENT PERCENTAGES

Outflow adjustment 

percentage 

GSIB FDIC-supervised institution ............................................................................................................................................ 100 

Category II FDIC-supervised institution ................................................................................................................................... 100 

Category III FDIC-supervised institution that: ......................................................................................................................... 100 

(1) Is a consolidated subsidiary of a Category III banking organization pursuant to 12 CFR 252.5 or 12 CFR 238.10 

with $75 billion or more in average weighted short-term wholesale funding; or 

(2) Has $75 billion or more in average weighted short-term wholesale funding and is not consolidated under a holding company 

Category III FDIC-supervised institution that: ......................................................................................................................... [70 to 85] 

(1) Is a consolidated subsidiary of a Category III banking organization pursuant to 12 CFR 252.5 or 12 CFR 238.10 

with less than $75 billion in average weighted short-term wholesale funding; or 

(2) Has less than $75 billion in average weighted short-term wholesale funding and is not consolidated under a 

holding company 

FDIC-supervised institution that is described in § 329.1(b)(1)(ii) ............................................................................................ 100 

* * * * * 

[Re-Proposal of Net Stable Funding 

Ratio’s Applicability] 

PART 329—LIQUIDITY RISK 

MEASUREMENT STANDARDS 

■ 35. In § 329.1, add paragraph (c) to 

read as follows: 

§ 329.1 Purpose and applicability. 

* * * * * 

(c) Applicability of the minimum 

stable funding standard. (1) An FDICsupervised institution is subject to the 

minimum stable funding standard and 

other requirements of subparts K 

through M if: 

(i) It is a GSIB FDIC-supervised 

institution, Category II FDIC-supervised 

institution, Category III FDIC-supervised 

institution that is the consolidated 

subsidiary of a Category III banking 

organization pursuant to 12 CFR 252.5 

or 12 CFR 238.10 with $75 billion or 

more in average weighted short-term 

wholesale funding, or a Category III 


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66058 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 

FDIC-supervised institution with $75 

billion or more in average weighted 

short-term wholesale funding that is not 

consolidated under a holding company; 

or 

(ii) It is an FDIC-supervised 

institution that has total consolidated 

assets equal to $10 billion or more, as 

reported on the most recent year-end 

Call Report, and is a consolidated 

subsidiary of a covered intermediate 

holding company that: 

(A) Has total consolidated assets of 

$250 billion or more, as reported on the 

most recent year-end (as applicable): 

(1) Consolidated Financial Statements 

for Holding Companies reporting form 

(FR Y–9C), or, if the covered 

intermediate holding company is not 

required to report on the FR Y–9C, its 

estimated consolidated assets as of the 

most recent year end, calculated in 

accordance with the instructions to the 

FR Y–9C; 

(2) Call Report; or 

(B) Has total consolidated on-balance 

sheet foreign exposure at the most 

recent year-end equal to $10 billion or 

more (where total on-balance sheet 

foreign exposure equals total crossborder claims less claims with a head 

office or guarantor located in another 

country plus redistributed guaranteed 

amounts to the country of the head 

office or guarantor plus local country 

claims on local residents plus 

revaluation gains on foreign exchange 

and derivative transaction products, 

calculated in accordance with the 

Federal Financial Institutions 

Examination Council (FFIEC) 009 

Country Exposure Report); 

(iii) It is a Category III FDICsupervised institution that meets the 

criteria in § 329.120(a) but does not 

meet the criteria in paragraph (c)(1)(i) of 

this section, and is subject to the 

requirements of this part in accordance 

with subpart M of this part; 

(iv) The FDIC has determined that 

application of this part is appropriate in 

light of the FDIC-supervised 

institution’s asset size, level of 

complexity, risk profile, scope of 

operations, affiliation with foreign or 

domestic covered entities, or risk to the 

financial system. 

(2)(i) An FDIC-supervised institution 

that becomes subject to the minimum 

stable funding standard and other 

requirements of subparts K through M of 

this part under paragraph (c)(1)(i) of this 

section on the effective date, must 

comply with the requirements of these 

subparts beginning on the first day of 

the second calendar quarter after which 

the FDIC-supervised institution 

becomes subject to the minimum stable 

funding standard and other 

requirements of this part. 

(ii) An FDIC-supervised institution 

that becomes subject to the minimum 

stable funding standard and other 

requirements of subparts K through M of 

this part under paragraph (c)(1)(ii) of 

this section after the effective date must 

comply with the requirements of 

subparts K through M of this part 

beginning on April 1 of the year in 

which the FDIC-supervised institution 

becomes subject to the minimum stable 

funding standard and other 

requirements of subparts K through M of 

this part: and 

(iii) An FDIC-supervised institution 

that becomes subject to the minimum 

stable funding standard and other 

requirements of subparts K through M of 

this part under paragraph (c)(1)(iv) of 

this section after the effective date must 

comply with the requirements of 

subparts K through M of this part on the 

date specified by the FDIC. 

(3) Subparts K through M of this part 

do not apply to: 

(i) A bridge financial company as 

defined in 12 U.S.C. 5381(a)(3), or a 

subsidiary of a bridge financial 

company; or 

(ii) A new depository institution or a 

bridge depository institution, as defined 

in 12 U.S.C. 1813(i). 

(4) An FDIC-supervised institution 

subject to a minimum stable funding 

standard under this part shall remain 

subject until the FDIC determines in 

writing that application of this part to 

the FDIC-supervised institution is not 

appropriate in light of the FDICsupervised institution’s asset size, level 

of complexity, risk profile, scope of 

operations, affiliation with foreign or 

domestic covered entities, or risk to the 

financial system. 

(5) In making a determination under 

paragraphs (c)(1)(iv) or (c)(4) of this 

section, the FDIC will apply, as 

appropriate, notice and response 

procedures in the same manner and to 

the same extent as the notice and 

response procedures set forth in 12 CFR 

324.5. 

* * * * * 

■ 36. Add subpart M to part 329 to read 

as follows: 

Subpart M—Net Stable Funding Ratio for 

FDIC-Supervised Institutions 

Sec. 

329.120 Applicability. 

329.121 Net stable funding ratio 

requirement. 

Subpart M—Net Stable Funding Ratio 

for FDIC-Supervised Institutions 

§ 329.120 Applicability. 

(a) Scope. This subpart applies to an 

FDIC-supervised institution that: 

(1) Is a Category III FDIC-supervised 

institution that is a consolidated 

subsidiary of a Category III banking 

organization pursuant to 12 CFR 252.5 

or 12 CFR 238.10 with less than $75 

billion in average weighted short-term 

wholesale funding; or 

(2) Is a Category III FDIC-supervised 

institution with less than $75 billion in 

average weighted short-term wholesale 

funding that is not consolidated under 

a holding company. 

(b) Applicable provisions. Except as 

otherwise provided in this subpart, the 

provisions of subparts A, K, and L of 

this part apply to FDIC-supervised 

institutions that are subject to this 

subpart. 

(c) Applicability. An FDIC-supervised 

institution that meets the threshold for 

applicability of this subpart under 

paragraph (a) of this section after the 

effective date must comply with the 

requirements of this subpart beginning 

on the first day of the second calendar 

quarter after which it meets the 

thresholds set forth in paragraph (a) of 

this section. 

§ 329.121 Net stable funding ratio 

requirement. 

(a) Calculation of the net stable 

funding ratio. An FDIC-supervised 

institution subject to this subpart must 

calculate and maintain a net stable 

funding ratio in accordance with 

§ 329.100 and this subpart. 

(b) Available stable funding amount. 

An FDIC-supervised institution subject 

to this subpart must calculate its ASF 

amount in accordance with subpart K of 

this part. 

(c) Required stable funding amount. 

An FDIC-supervised institution subject 

to this subpart must calculate its RSF 

amount in accordance with subpart K of 

this part, provided, however, that the 

RSF amount of an FDIC-supervised 

institution subject to this subpart equals 

[70 to 85] percent of the RSF amount 

calculated in accordance with subpart K 

of this part. 

Dated: October 30, 2018. 

Joseph M. Otting, 

Comptroller of the Currency. 

By order of the Board of Governors of the 

Federal Reserve System, November 30, 2018. 

Yao Chin-Chao, 

Assistant Secretary of the Board. 

Dated at Washington, DC, on November 20, 

2018. 

By order of the Board of Directors. 


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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Proposed Rules 66059 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2018–27177 Filed 12–20–18; 8:45 am] 

BILLING CODE 4810–33–P 6210–01–P 6714–01–P 


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