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SUBPART G—TRANSITION PROVISIONS

SECTION 217.300—Transitions

(a) Capital conservation and countercyclical capital buffer.
(1) From January 1, 2014 through December 31, 2015, a Board-regulated institution is not subject to limits on distributions and discretionary bonus payments under section 217.11 of subpart B of this part notwithstanding the amount of its capital conservation buffer or any applicable countercyclical capital buffer amount.
(2) Notwithstanding section 217.11, beginning January 1, 2016 through December 31, 2018 a Board-regulated institution’s maximum payout ratio shall be determined as set forth in Table 1 to section 217.300.
Table 1 to section 217.300
Transition period Capital conservation buffer Maximum payout ratio (as a percentage of eligible retained income)
Calendar year 2016 Greater than 0.625 percent plus 25 percent of any applicable countercyclical capital buffer amount and 25 percent of any applicable GSIB surcharge No payout ratio limitation applies under this section
Less than or equal to 0.625 percent plus 25 percent of any applicable countercyclical capital buffer amount and 25 percent of any applicable GSIB surcharge, and greater than 0.469 percent plus 17.25 percent of any applicable countercyclical capital buffer amount and 17.25 percent of any applicable GSIB surcharge 60 percent
Less than or equal to 0.469 percent plus 17.25 percent of any applicable countercyclical capital buffer amount and 17.25 percent of any applicable GSIB surcharge, and greater than 0.313 percent plus 12.5 percent of any applicable countercyclical capital buffer amount and 12.5 percent of any applicable GSIB surcharge 40 percent
Less than or equal to 0.313 percent plus 12.5 percent of any applicable countercyclical capital buffer amount and 12.5 percent of any applicable GSIB surcharge, and greater than 0.156 percent plus 6.25 percent of any applicable countercyclical capital buffer amount and 6.25 percent of any applicable GSIB surcharge 20 percent
Less than or equal to 0.156 percent plus 6.25 percent of any applicable countercyclical capital buffer amount and 6.25 percent of any applicable GSIB surcharge 0 percent
Calendar year 2017 Greater than 1.25 percent plus 50 percent of any applicable countercyclical capital buffer amount and 50 percent of any applicable GSIB surcharge No payout ratio limitation applies under this section
Less than or equal to 1.25 percent plus 50 percent of any applicable countercyclical capital buffer amount and 50 percent of any applicable GSIB surcharge, and greater than 0.938 percent plus 37.5 percent of any applicable countercyclical capital buffer amount and 37.5 percent of any applicable GSIB surcharge 60 percent
Less than or equal to 0.938 percent plus 37.5 percent of any applicable countercyclical capital buffer amount and 37.5 percent of any applicable GSIB surcharge, and greater than 0.625 percent plus 25 percent of any applicable countercyclical capital buffer amount and 25 percent of any applicable GSIB surcharge 40 percent
Less than or equal to 0.625 percent plus 25 percent of any applicable countercyclical capital buffer amount and 25 percent of any applicable GSIB surcharge, and greater than 0.313 percent plus 12.5 percent of any applicable countercyclical capital buffer amount and 12.5 percent of any applicable GSIB surcharge 20 percent
Less than or equal to 0.313 percent plus 12.5 percent of any applicable countercyclical capital buffer amount and 12.5 percent of any applicable GSIB surcharge 0 percent
Table 1 to section 217.300—continued
Transition period Capital conservation buffer Maximum payout ratio (as a percentage of eligible retained income)
Calendar year 2018 Greater than 1.875 percent plus 75 percent of any applicable countercyclical capital buffer amount and 75 percent of any applicable GSIB surcharge No payout ratio limitation applies under this section
Less than or equal to 1.875 percent plus 75 percent of any applicable countercyclical capital buffer amount and 75 percent of any applicable GSIB surcharge, and greater than 1.406 percent plus 56.25 percent of any applicable countercyclical capital buffer amount and 56.25 percent of any applicable GSIB surcharge 60 percent
Less than or equal to 1.406 percent plus 56.25 percent of any applicable countercyclical capital buffer amount and 56.25 percent of any applicable GSIB surcharge, and greater than 0.938 percent plus 37.5 percent of any applicable countercyclical capital buffer amount and 37.5 percent of any applicable GSIB surcharge 40 percent
Less than or equal to 0.938 percent plus 37.5 percent of any applicable countercyclical capital buffer amount and 37.5 percent of any applicable GSIB surcharge, and greater than 0.469 percent plus 18.75 percent of any applicable countercyclical capital buffer amount and 18.75 percent of any applicable GSIB surcharge 20 percent
Less than or equal to 0.469 percent plus 18.75 percent of any applicable countercyclical capital buffer amount and 18.75 percent of any applicable GSIB surcharge 0 percent
(b) [Reserved]
Table 2 to section 217.300
Transition period Transition deductions under section 217.22(a)(1) and (7) Transition deductions under section 217.22(a)(3)-(6)
Percentage of the deductions from common equity tier 1 capital Percentage of the deductions from common equity tier 1 capital Percentage of the deductions from tier 1 capital
Calendar year 2014 100 20 80
Calendar year 2015 100 40 60
Calendar year 2016 100 60 40
Calendar year 2017 100 80 20
Calendar year 2018, and thereafter 100 100 0
Table 3 to section 217.300
Transition period Transition deductions under section 217.22(a)(2)—Percentage of the deductions from common equity tier 1 capital
Calendar year 2014 20
Calendar year 2015 40
Calendar year 2016 60
Calendar year 2017 80
Calendar year 2018, and thereafter 100
Table 4 to section 217.300
Transition period Transition adjustments under section 217.22(b)(2)
Percentage of the adjustment applied to common equity tier 1 capital Percentage of the adjustment applied to tier 1 capital
Calendar year 2014 20 80
Calendar year 2015 40 60
Calendar year 2016 60 40
Calendar year 2017 80 20
Calendar year 2018, and thereafter 100 0
Table 5 to section 217.300
Transition period Percentage of the transition AOCI adjustment amount to be applied to common equity tier 1 capital
Calendar year 2014 80
Calendar year 2015 60
Calendar year 2016 40
Calendar year 2017 20
Calendar year 2018, and thereafter 0
Table 6 to section 217.300
Transition period Percentage of unrealized gains on available-for-sale preferred stock classified as an equity security under GAAP and available-for-sale equity exposures that may be included in tier 2 capital
Calendar year 2014 36
Calendar year 2015 27
Calendar year 2016 18
Calendar year 2017 9
Calendar year 2018, and thereafter 0
Table 7 to section 217.300
Transition period Transitions for deductions under section 217.22(c) and (d)—Percentage of additional deductions from regulatory capital
Calendar year 2014 20
Calendar year 2015 40
Calendar year 2016 60
Calendar year 2017 80
Calendar year 2018, and thereafter 100
(c) Non-qualifying capital instruments.
(1) Depository institution holding companies with total consolidated assets of more than $15 billion as of December 31, 2009 that were not mutual holding companies prior to May 19, 2010. The transition provisions in this paragraph (c)(1) apply to debt or equity instruments that do not meet the criteria for additional tier 1 or tier 2 capital instruments in section 217.20, but that were issued and included in tier 1 or tier 2 capital, respectively prior to May 19, 2010 (non-qualifying capital instruments), and that were issued by a depository institution holding company with total consolidated assets greater than or equal to $15 billion as of December 31, 2009 that was not a mutual holding company prior to May 19, 2010 (2010 MHC) (depository institution holding company of $15 billion or more).
(i) A depository institution holding company of $15 billion or more may include in tier 1 and tier 2 capital non-qualifying capital instruments up to the applicable percentage set forth in Table 8 to section 217.300 of the aggregate outstanding principal amounts of non-qualifying tier 1 and tier 2 capital instruments, respectively, that are outstanding as of January 1, 2014, beginning January 1, 2014, for a depository institution holding company of $15 billion or more that is an advanced approaches Board-regulated institution that is not a savings and loan holding company, and beginning January 1, 2015, for all other depository institution holding companies of $15 billion or more.
(ii) A depository institution holding company of $15 billion or more must apply the applicable percentages set forth in Table 8 to section 217.300 separately to the aggregate amounts of its tier 1 and tier 2 non-qualifying capital instruments.
(iii) The amount of non-qualifying capital instruments that must be excluded from additional tier 1 capital in accordance with this section may be included in tier 2 capital without limitation, provided the instruments meet the criteria for tier 2 capital set forth in section 217.20(d).
(iv) Non-qualifying capital instruments that do not meet the criteria for tier 2 capital set forth in section 217.20(d) may be included in tier 2 capital as follows:
(A) A depository institution holding company of $15 billion or more that is not an advanced approaches Boardregulated institution may include non-qualifying capital instruments that have been phased-out of tier 1 capital in tier 2 capital, and
(B) During calendar years 2014 and 2015, a depository institution holding company of $15 billion or more that is an advanced approaches Board-regulated institution may include non-qualifying capital instruments in tier 2 capital that have been phased out of tier 1 capital in accordance with Table 8 to section 217.300. Beginning January 1, 2016, a depository institution holding company of $15 billion or more that is an advanced approaches Board-regulated institution may include non-qualifying capital instruments in tier 2 capital that have been phased out of tier 1 capital in accordance with Table 8, up to the applicable percentages set forth in Table 9 to section 217.300.
(2) Mergers and acquisitions.
(i) A depository institution holding company of $15 billion or more that acquires after December 31, 2013 either a depository institution holding company with total consolidated assets of less than $15 billion as of December 31, 2009 (depository institution holding company under $15 billion) or a depository institution holding company that is a 2010 MHC, may include in regulatory capital the non-qualifying capital instruments issued by the acquired organization up to the applicable percentages set forth in Table 8 to section 217.300.
(ii) If a depository institution holding company under $15 billion acquires after December 31, 2013 a depository institution holding company under $15 billion or a 2010 MHC, and the resulting organization has total consolidated assets of $15 billion or more as reported on the resulting organization’s FR Y-9C for the period in which the transaction occurred, the resulting organization may include in regulatory capital non-qualifying instruments of the resulting organization up to the applicable percentages set forth in Table 8 to section 217.300.
(3) Depository institution holding companies under $15 billion and 2010 MHCs.
(i) Non-qualifying capital instruments issued by depository institution holding companies under $15 billion and 2010 MHCs prior to May 19, 2010, may be included in additional tier 1 or tier 2 capital if the instrument was included in tier 1 or tier 2 capital, respectively, as of January 1, 2014.
(ii) Non-qualifying capital instruments includable in tier 1 capital are subject to a limit of 25 percent of tier 1 capital elements, excluding any non-qualifying capital instruments and after applying all regulatory capital deductions and adjustments to tier 1 capital.
(iii) Non-qualifying capital instruments that are not included in tier 1 as a result of the limitation in paragraph (c)(3)(ii) of this section are includable in tier 2 capital.
(4) Depository institutions.
(i) Beginning on January 1, 2014, a depository institution that is an advanced approaches Board-regulated institution, and beginning on January 1, 2015, all other depository institutions, may include in regulatory capital debt or equity instruments issued prior to September 12, 2010 that do not meet the criteria for additional tier 1 or tier 2 capital instruments in section 217.20 but that were included in tier 1 or tier 2 capital respectively as of September 12, 2010 (non-qualifying capital instruments issued prior to September 12, 2010) up to the percentage of the outstanding principal amount of such non-qualifying capital instruments as of January 1, 2014 in accordance with Table 9 to section 217.300.
(ii) Table 9 to section 217.300 applies separately to tier 1 and tier 2 non-qualifying capital instruments.
(iii) The amount of non-qualifying capital instruments that cannot be included in additional tier 1 capital under this section may be included in tier 2 capital without limitation, provided that the instruments meet the criteria for tier 2 capital instruments under section 217.20(d).
(d) [Reserved]
Table 8 to section 217.300
Transition period (calendar year) Percentage of non-qualifying capital instruments includable in additional tier 1 or tier 2 capital for a depository institution holding company of $15 billion or more
Calendar year 2014 50
Calendar year 2015 25
Calendar year 2016, and thereafter 0
Table 9 to section 217.300
Transition period (calendar year) Percentage of non-qualifying capital instruments includable in additional tier 1 or tier 2 capital
Calendar year 2014 80
Calendar year 2015 70
Calendar year 2016 60
Calendar year 2017 50
Calendar year 2018 40
Calendar year 2019 30
Calendar year 2020 20
Calendar year 2021 10
Calendar year 2022, and thereafter 0
Transition period Percentage of the amount of surplus or non-qualifying minority interest that can be included in regulatory capital during the transition period
Calendar year 2014 80
Calendar year 2015 60
Calendar year 2016 40
Calendar year 2017 20
Calendar year 2018, and thereafter 0
(e) Prompt corrective action. For purposes of 12 CFR part 208, subpart D, a Board-regulated institution must calculate its capital measures and tangible equity ratio in accordance with the transition provisions in this section.
(f) Until July 21, 2015, this part will not apply to any bank holding company subsidiary of a foreign banking organization that is currently relying on Supervision and Regulation Letter SR-01-01 issued by the Board (as in effect on May 19, 2010).
(g) A Board-regulated institution that is not an advanced approaches Board-regulated institution may apply the treatment under sections 217.21 and 217.22(c)(2), (5), (6), and (d)(2) applicable to an advanced approaches Board-regulated institution during the calendar quarter beginning January 1, 2020. During the quarter beginning January 1, 2020, a Board-regulated institution that makes such an election must deduct 80 percent of the amount otherwise required to be deducted under section 217.22(d)(2) and must apply a 100 percent risk weight to assets not deducted under section 217.22(d)(2). In addition, during the quarter beginning January 1, 2020, a Board-regulated institution that makes such an election must include in its regulatory capital 20 percent of any minority interest that exceeds the amount of minority interest includable in regulatory capital under section 217.21 as it applies to an advanced approaches Board-regulated institution. A Board-regulated institution that is not an advanced approaches Board-regulated institution must apply the treatment under sections 217.21 and 217.22 applicable to a Board-regulated institution that is not an advanced approaches Board-regulated institution beginning April 1, 2020, and thereafter.
(h) SA-CCR. An advanced approaches Board-regulated institution may use CEM rather than SA-CCR for purposes of sections 217.34(a) and 217.132(c) until January 1, 2022. A Board-regulated institution must provide prior notice to the Board if it decides to begin using SA-CCR before January 1, 2022. On January 1, 2022, and thereafter, an advanced approaches Board-regulated institution must use SA-CCR for purposes of sections 217.34(a), 217.132(c), and 217.135(d). Once an advanced approaches Board-regulated institution has begun to use SA-CCR, the advanced approaches Board-regulated institution may not change to use CEM.
(i) Default fund contributions. Prior to January 1, 2022, a Board-regulated institution that calculates the exposure amounts of its derivative contracts under the standardized approach for counterparty credit risk in section 217.132(c) may calculate the risk-weighted asset amount for a default fund contribution to a QCCP under either method 1 under section 217.35(d)(3)(i) or method 2 under section 217.35(d)(3)(ii), rather than under section 217.133(d).

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