(a) Purpose. This part establishes minimum capital requirements
and overall capital adequacy standards for entities described in paragraph
(c)(1) of this section. This part includes methodologies for calculating
minimum capital requirements, public disclosure requirements related
to the capital requirements, and transition provisions for the application
of this part.
(b) Limitation
of authority. Nothing in this part shall be read to limit the
authority of the Board to take action under other provisions of law,
including action to address unsafe or unsound practices or conditions,
deficient capital levels, or violations of law or regulation, under
section 8 of the Federal Deposit Insurance Act, section 8 of the Bank
Holding Company Act, or section 10 of the Home Owners’ Loan
Act.
(c) Applicability.
(1)
(i) Applicability in general. This part applies on a consolidated
basis to every Board-regulated institution that is:
(A) A state member bank;
(B) A bank holding company
domiciled in the United States that is not subject to 12 CFR part
225, appendix C, provided that the Board may by order apply any or
all of this part to any bank holding company, based on the institution’s
size, level of complexity, risk profile, scope of operations, or financial
condition; or
(C) A covered
savings and loan holding company domiciled in the United States, other
than a savings and loan holding company that meets the requirements
of 12 CFR part 225, appendix C, as if the savings and loan holding
company were a bank holding company and the savings association were
a bank. For purposes of compliance with the capital adequacy requirements
and calculations in this part, savings and loan holding companies
that do not file form FR Y-9C or form FR Q-1 should follow the instructions
to the FR Y-9C.
(ii) Mid-tier holding companies of
insurance depository institution holding companies. In the case
of a bank holding company, or a covered savings and loan holding company,
that does not calculate minimum risk-based capital requirements under
subpart B of this part by operation of section 217.10(f)(1), this
part applies to a depository institution holding company that is a
subsidiary of such bank holding company or covered savings and loan
holding company, provided that:
(A) The subsidiary depository institution
holding company is an insurance mid-tier holding company; and
(B) The subsidiary depository
institution holding company’s assets and liabilities are not
consolidated with those of a depository institution holding company
that controls the subsidiary for purposes of determining the parent
depository institution holding company’s capital requirements
and capital ratios under subparts B through F of this part.
(2) Minimum capital requirements and overall
capital adequacy standards. Each Board-regulated institution
must calculate its minimum capital requirements and meet the overall
capital adequacy standards in subpart B of this part.
(3) Regulatory capital. Each Board-regulated institution must calculate
its regulatory capital in accordance with subpart C of this part.
(4) Risk-weighted assets.
(i) Each
Board-regulated institution must use the methodologies in subpart
D of this part (and subpart F of this part for a market risk Board-regulated
institution) to calculate standardized total risk-weighted assets.
(ii) Each advanced
approaches Board-regulated institution must use the methodologies
in subpart E (and subpart F of this part for a market risk Board-regulated
institution) to calculate advanced approaches total risk-weighted
assets.
(5) Disclosures.
(i) Except
for an advanced approaches Board-regulated institution that is making
public disclosures pursuant to the requirements in subpart E of this
part, each Board-regulated institution with total con solidated
assets of $50 billion or more must make the public disclosures described
in subpart D of this part.
(ii) Each market risk Board-regulated
institution must make the public disclosures described in subpart
F of this part.
(iii) Each advanced approaches Board-regulated institution must make
the public disclosures described in subpart E of this part.
(d) Reservation
of authority.
(1) Additional
capital in the aggregate. The Board may require a Board-regulated
institution to hold an amount of regulatory capital greater than otherwise
required under this part if the Board determines that the Board-regulated
institution’s capital requirements under this part are not commensurate
with the Board-regulated institution’s credit, market, operational,
or other risks.
(2) Regulatory capital elements.
(i) If the
Board determines that a particular common equity tier 1, additional
tier 1, or tier 2 capital element has characteristics or terms that
diminish its ability to absorb losses, or otherwise present safety
and soundness concerns, the Board may require the Board-regulated
institution to exclude all or a portion of such element from common
equity tier 1 capital, additional tier 1 capital, or tier 2 capital,
as appropriate.
(ii) Notwithstanding the criteria for regulatory capital instruments
set forth in subpart C of this part, the Board may find that a capital
element may be included in a Board-regulated institution’s common
equity tier 1 capital, additional tier 1 capital, or tier 2 capital
on a permanent or temporary basis consistent with the loss absorption
capacity of the element and in accordance with section 217.20(e).
(3) Risk-weighted asset amounts. If the Board
determines that the risk-weighted as- set amount calculated under
this part by the Board-regulated institution for one or more exposures
is not commensurate with the risks associated with those exposures,
the Board may require the Board-regulated institution to assign a
different risk-weighted asset amount to the exposure(s) or to deduct
the amount of the exposure(s) from its regulatory capital.
(4) Total leverage. If the Board determines that the total leverage
exposure, or the amount reflected in the Board-regulated institution’s
reported average total consolidated assets, for an on- or off-balance
sheet exposure calculated by a Board-regulated institution under section
217.10 is inappropriate for the exposure(s) or the circumstances of
the Board-regulated institution, the Board may require the Board-regulated
institution to adjust this exposure amount in the numerator and the
denominator for purposes of the leverage ratio calculations.
(5) Consolidation of certain exposures. The Board may determine
that the risk-based capital treatment for an exposure or the treatment
provided to an entity that is not consolidated on the Board-regulated
institution’s balance sheet is not commensurate with the risk
of the exposure and the relationship of the Board-regulated institution
to the entity. Upon making this determination, the Board may require
the Board-regulated institution to treat the exposure or entity as
if it were consolidated on the balance sheet of the Board-regulated
institution for purposes of determining the Board-regulated institution’s
risk-based capital requirements and calculating the Board-regulated
institution’s risk-based capital ratios accordingly. The Board
will look to the substance of, and risk associated with, the transaction,
as well as other relevant factors the Board deems appropriate in determining
whether to require such treatment.
(6) Other reservation
of authority. With respect to any deduction or limitation required
under this part, the Board may require a different deduction or limitation,
provided that such alternative deduction or limitation is commensurate
with the Board-regulated institution’s risk and consistent with
safety and soundness.
(e) Notice and response procedures. In making
a determination under this section, the Board will apply notice and
response procedures in the same manner and to the same extent as the
notice and response procedures in 12 CFR 263.202.
(f) Timing.
(1) Subject to the transition provisions
in subpart G of this part, an advanced approaches Board-regulated
institution that is not a savings and loan holding company must:
(i) Except as described in paragraph (f)(1)(ii) of this section,
beginning on January 1, 2014, calculate advanced approaches total
risk-weighted assets in accordance with subpart E and, if applicable,
subpart F of this part and, beginning on January 1, 2015, calculate
standardized total risk-weighted assets in accordance with subpart
D and, if applicable, subpart F of this part;
(ii) From January 1, 2014 to December
31, 2014:
(A) Calculate risk-weighted assets in accordance
with the general risk-based capital rules under 12 CFR parts 208 or
225, appendix A, and, if applicable, appendix E (state member banks
or bank holding companies, respectively)
1 and substitute such risk-weighted assets
for standardized total risk-weighted assets for purposes of section
217.10;
(B) If applicable,
calculate general market risk equivalent assets in accordance with
12 CFR parts 208 or 225, appendix E, section 4(a)(3) (state member
banks or bank holding companies, respectively) and substitute such
general market risk equivalent assets for standardized market risk-weighted
assets for purposes of section 217.20(d)(3); and
(C) Substitute the corresponding provision
or provisions of 12 CFR parts 208 or 225, appendix A, and, if applicable,
appendix E (state member banks or bank holding companies, respectively)
for any reference to subpart D of this part in: section 217.121(c);
section 217.124(a) and (b); section 217.144(b); section 217.154(c)
and (d); section 217.202(b) (definition of covered position in paragraph
(b)(3)(iv)); and section 217.211(b);
2(iii) Beginning on January 1, 2014, calculate and maintain minimum
capital ratios in accordance with subparts A, B, and C of this part,
provided, however, that such Board-regulated institution must:
(A) From January 1, 2014 to December 31, 2014, maintain a minimum
common equity tier 1 capital ratio of 4 percent, a minimum tier 1
capital ratio of 5.5 percent, a minimum total capital ratio of 8 percent,
and a minimum leverage ratio of 4 percent; and
(B) From January 1, 2015 to December 31, 2017,
an advanced approaches Board-regulated institution:
(1) Is not required to maintain a
supplementary leverage ratio; and
(2) Must calculate a supplementary
leverage ratio in accordance with section 217.10(c), and must report
the calculated supplementary leverage ratio on any applicable regulatory
reports.
(2) Subject to the transition provisions
in subpart G of this part, a Board-regulated institution that is not
an advanced approaches Board-regulated institution or a savings and
loan holding company that is an advanced approaches Board-regulated
institution must:
(i) Beginning on January 1, 2015, calculate
standardized total risk-weighted assets in accordance with subpart
D, and if applicable, subpart F of this part; and
(ii) Beginning on January
1, 2015, calculate and maintain minimum capital ratios in accordance
with subparts A, B and C of this part, provided, however, that from
January 1, 2015 to December 31, 2017, a savings and loan holding company
that is an advanced approaches Board-regulated institution:
(A) Is not required
to maintain a supplementary leverage ratio; and
(B) Must calculate a supplementary leverage
ratio in accordance with section 217.10(c), and must report the calculated
supplementary leverage ratio on any applicable regulatory reports.
(3) Beginning on January 1, 2016, and subject to the transition provisions
in subpart G of this part, a Board-regulated institution is subject
to limitations on distributions and discretionary bonus payments with
respect to its capital conservation buffer, any applicable countercyclical
capital buffer amount, and any applicable GSIB surcharge, in accordance
with subpart B of this part.
(4) Beginning January 1, 2018, a global
systemically important BHC (as defined in section 217.2) is subject
to limitations on distributions and discretionary bonus payments in
accordance with the lower of the maximum payout amount as determined
under section 217.11(a)(2)(iii) and the maximum leverage payout amount
as determined under section 217.11(a)(2)(vi).
(5) A depository institution holding company,
a U.S. intermediate holding company, or a state member bank that changes
from one category of Board-regulated institution to another of such
categories must comply with the requirements of its category in this
part, including applicable transition provisions of the requirements
in this part, no later than on the first day of the second quarter
following the change in the company’s category.
(g) Depository institution
holding companies and treatment of subsidiary state-regulated insurers,
regulated foreign subsidiaries, and regulated foreign affiliates.
(1) In general. In complying with the capital adequacy requirements
of this part (except for the requirements and calculations of subpart
J of this part), including any determination of applicability under
section 217.100 or section 217.201, an insurance bank holding company,
insurance savings and loan holding company, or insurance mid-tier
holding company may elect not to consolidate the assets and liabilities
of its subsidiary state-regulated insurers, regulated foreign subsidiaries,
and regulated foreign affiliates. Such an institution that makes this
election must either:
(i) Deduct from the sum of its common
equity tier 1 capital elements the aggregate amount of its outstanding
equity investment, including retained earnings, in such subsidiaries
and affiliates; or
(ii) Include in the risk-weighted assets of the Board-regulated institution
the aggregate amount of its outstanding equity investment, including
retained earnings, in such subsidiaries and affiliates and assign
to these assets a 400 percent risk weight.
(2) Method of election.
(i) An insurance bank holding company,
insurance savings and loan holding company, or insurance mid-tier
holding company may make the election described in paragraph (g)(1)
of this section by indicating that it has made this election on the
applicable regulatory report, filed by the insurance bank holding
company, insurance savings and loan holding company, or insurance
mid-tier holding company for the first reporting period in which it
is an insurance bank holding company, insurance savings and loan holding
company, or insurance mid-tier holding company. The electing Board-regulated
institution must indicate on the applicable regulatory report whether
it elects to deduct from the sum of its common equity tier 1 capital
elements in accordance with paragraph (g)(1)(i) of this section or
whether it elects to include an amount in its risk-weighted assets
in accordance with paragraph (g)(1)(ii) of this section.
(ii) An insurance bank
holding company, insurance savings and loan holding company, or insurance
mid-tier holding company that has not made an effective election pursuant
to paragraph (g)(2)(i) of this section, or that seeks to change its
election (or its choice of treatment under paragraph (g)(1) of this
section) due to a change in control, business combination, or other
legitimate business purpose, may do so only with the prior approval
of the Board, effective as of the first reporting period after the
period in which the Board approves the election, or such other date
specified in the approval.
