(a)
Adequately
capitalized correspondents.1 For the purpose of this part, a correspondent is considered adequately
capitalized if the correspondent
has—(1) a total risk-based capital ratio, as
defined in paragraph (e)(1) of this section, of 8.0 percent or greater;
(2) a tier 1 risk-based capital ratio,
as defined in paragraph (e)(2) of this section, of 4.0 percent or
greater; and
(3) a leverage ratio,
as defined in paragraph (e)(3) of this section, of 4.0 percent or
greater.
(4) Notwithstanding paragraphs
(a)(1) through (3) of this section, a qualifying community banking
organization (as defined in section 217.12 of this chapter) that is
subject to the community bank leverage ratio (as defined in section
217.12 of this chapter) is considered to have met the minimum capital
requirements in this paragraph (a).
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(b) Frequency of monitoring capital levels. A bank shall obtain
information to demonstrate that a correspondent is at least adequately
capitalized on a quarterly basis, either from the most recently available
Report of Condition and Income, Thrift Financial Report, financial
statement, or bank rating report for the correspondent. For a foreign
bank correspondent for which quarterly financial statements or reports
are not available, a bank shall obtain such information on as frequent
a basis as such information is available. Information obtained directly
from a correspondent for the purpose of this section should be based
on the most recently available Report of Condition and Income, Thrift
Financial Report, or financial statement of the correspondent.
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(c) Foreign banks. A correspondent that is
a foreign bank may be considered adequately capitalized under this
section without regard to the minimum leverage ratio required under
paragraph (a)(3) of this section.
(d) Reliance on information. A bank may rely on information as to
the capital levels of a correspondent obtained from the correspondent,
a bank rating agency, or other party that it reasonably believes to
be accurate.
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(e) Definitions. For the purposes
of this section:
(1) Total risk-based capital ratio means the ratio of qualifying
total capital to weighted risk assets.
(2) Tier 1 risk-based capital ratio means the ratio of tier
1 capital to weighted-risk assets.
(3) Leverage ratio means the ratio
of tier 1 capital to average total consolidated assets, as calculated
in accordance with the capital adequacy guidelines of the correspondent’s
primary federal supervisor.
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(f) Calculation of capital ratios.
(1) For a correspondent that is a U.S.
depository institution, the ratios shall be calculated in accordance
with the capital adequacy guidelines of the correspondent’s primary
federal supervisor.
(2) For a correspondent
that is a foreign bank organized in a country that has adopted the
risk-based framework of the Basel Capital Accord, the ratios shall
be calculated in accordance with the capital adequacy guidelines of
the appropriate supervisory authority of the country in which the
correspondent is chartered.
(3)
For a correspondent that is a foreign bank organized in a country
that has not adopted the risk-based framework of the Basel Capital
Accord, the ratios shall be calculated in accordance with the provisions
of the Basel Capital Accord.
