(a) Covered IHC
long-term debt requirement. A covered IHC must have an outstanding
eligible covered IHC long-term debt amount that is no less than the
amount equal to the greatest of:
(1) 6 percent of the covered IHC’s total
risk-weighted assets;
(2) If the
covered IHC is required to maintain a minimum supplementary leverage
ratio, 2.5 percent of the covered IHC’s total leverage exposure; and
(3) 3.5 percent of the covered IHC’s
average total consolidated assets.
(b) Outstanding eligible covered IHC long-term debt
amount.
(1) A Covered
IHC’s outstanding eligible Covered IHC long-term debt amount is the
sum of:
(i) One hundred
(100) percent of the amount due to be paid of unpaid principal of
the outstanding eligible Covered IHC debt securities issued by the
Covered IHC in greater than or equal to 730 days (two years); and
(ii) Fifty (50) percent of the
amount due to be paid of unpaid principal of the outstanding eligible
Covered IHC debt securities issued by the Covered IHC in greater than
or equal to 365 days (one year) and less than 730 days (two years);
and
(iii) Zero (0) percent of
the amount due to be paid of unpaid principal of the outstanding eligible
Covered IHC debt securities issued by the Covered IHC in less than
365 days (one year).
(2) For purposes of paragraph (b)(1) of this section, the date on
which principal is due to be paid on an outstanding eligible covered
IHC debt security is calculated from the earlier of:
(i) The date on which payment of
principal is required under the terms governing the instrument, without
respect to any right of the holder to accelerate payment of principal;
and
(ii) The date the holder
of the instrument first has the contractual right to request or require
payment of the amount of principal, provided that, with respect to
a right that is exercisable on one or more dates that are specified
in the instrument only on the occurrence of an event (other than an
event of a receivership, insolvency, liquidation, or similar proceeding
of the covered IHC, or a failure of the covered IHC to pay principal
or interest on the instrument when due), the date for the outstanding
eligible covered IHC debt security under this paragraph (b)(2)(ii)
will be calculated as if the event has occurred.
(3) After notice and response proceedings
consistent with 12 CFR part 263, subpart E, the Board may order a
covered IHC to exclude from its outstanding eligible covered IHC long-term
debt amount any debt security with one or more features that would
significantly impair the ability of such debt security to take losses.
(c) Redemption and repurchase. Without the prior approval of the Board, a covered IHC may not redeem
or repurchase any outstanding eligible covered IHC debt security if,
immediately after the redemption or repurchase, the covered IHC would
not have an outstanding eligible covered IHC long-term debt amount
that is sufficient to meet its covered IHC long-term debt requirement
under paragraph (a) of this section.
