The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the FDIC (collectively, the "agencies") proposed extending the current transitional capital treatment of certain regulatory capital deductions, risk weights and minority interest requirements.
The agencies adopted rules in 2013 that made capital requirements for banking organizations more stringent. These rules established limits on including assets owned by subsidiaries in regulatory capital calculations (minority interest limitations), as well as other mandates for deducting certain assets from an organization's regulatory capital. The rules were subject to transitional provisions that allowed organizations to make appropriate preparations for the new requirements. Some provisions are scheduled to become applicable on December 31, 2017, while others will become applicable on January 1, 2018.
In accordance with the March 2017 Joint Report to Congress on the Economic Growth and Regulatory Paperwork Reduction Act by the Federal Financial Institutions Examination Council, the agencies are developing a proposal to simplify the capital rules in order to reduce regulatory burdens while still "maintaining safety and soundness and the quality and quantity of regulatory capital in the banking system." Since the proposal is still being developed, the agencies now propose extending the transitional rules for most banking organizations. Banks with over $250 billion in total consolidated assets and/or greater than $10 billion in total foreign exposure still would be subject to the current capital rules. These organizations would be required to comply fully with the capital rules beginning on the aforementioned dates (December 31, 2017 and January 1, 2018).
The agencies requested comments on the proposed extension of the transitional rules. Comments must be received within 30 days of publication of the rule proposal in the Federal Register.
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