(a) Definitions.
(1) Debt-to-equity ratio means the
ratio of a company’s total liabilities to a company’s total equity
capital less goodwill.
(2) Debt and equity have the same meaning as “total
liabilities” and “total equity capital,” respectively, as reported
by a bank holding company on the FR Y-9C.
(b) Notice and maximum debt-to-equity ratio
requirement. The Council, or the Board on behalf of the Council,
will provide written notice to a bank holding company to the extent
that the Council makes a determination, pursuant to section 165(j)
of the Dodd-Frank Act, that a bank holding company poses a grave threat
to the financial stability of the United States and that the imposition
of a debt-to-equity requirement is necessary to mitigate such risk.
Beginning no later than 180 days after receiving written notice from
the Council or from the Board on behalf of the Council, the bank holding
company must achieve and maintain a debt-to-equity ratio of no more
than 15-to-1.
(c) Extension. The Board may, upon request by the bank holding company for which
the Council has made a determination pursuant to section 165(j) of
the Dodd-Frank Act, extend the time period for compliance established
under paragraph (b) of this section for up to two additional periods
of 90 days each, if the Board determines that the identified company
has made good faith efforts to comply with the debt-to-equity ratio
requirement and that each extension would be in the public interest.
Requests for an extension must be received in writing by the Board
not less than 30 days prior to the expiration of the existing time
period for compliance and must provide information sufficient to demonstrate
that the bank holding company has made good faith efforts to comply
with the debt-to-equity ratio requirement and that each extension
would be in the public interest.
(d) Termination. The debt-to-equity ratio requirement
in paragraph (b) of this section shall cease to apply to a bank holding
company as of the date it receives notice from the Council of a determination
that the bank holding company no longer poses a grave threat to the
financial stability of the United States and that
the imposition of a debt-to-equity requirement is no longer necessary.
