Minimum Capital Ratios; Issuance of Directives, 76840-76841 [2012-31485]

Download as PDF 76840 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Rules and Regulations updated threshold for the asset-size exemption available publicly as soon as possible after all data needed for the calculation are available, the Bureau is making the final rule effective immediately upon publication in the Federal Register. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where general notice of proposed rulemaking is not required. 5 U.S.C. 603 and 604. As noted previously, the Bureau has determined that it is unnecessary to publish a general notice of proposed rulemaking for this final rule. Accordingly the RFA’s requirements relating to an initial and final regulatory flexibility analysis do not apply. List of Subjects in 12 CFR Part 1003 Banks, Banking, Credit unions, Mortgages, National banks, Savings associations, Reporting and recordkeeping requirements. PART 1003—HOME MORTGAGE DISCLOSURE (REGULATION C) 1. The authority citation for part 1003 continues to read as follows: ■ Authority: 12 U.S.C. 2803, 2804, 2805, 5512, 5581. 2. In Supplement I to part 1003, under Section 1003.2—Definitions, under the definition ‘‘Financial institution’’, paragraph 2 is revised to read as follows: ■ Supplement I to Part 1003—Staff Commentary * * * * Section 1003.2—Definitions * * * * * Financial institution. * * * * * 2. Adjustment of exemption threshold for banks, savings associations, and credit unions. For data collection in 2013, the assetsize exemption threshold is $42 million. Banks, savings associations, and credit unions with assets at or below $42 million as of December 31, 2012, are exempt from collecting data for 2013. ebenthall on DSK5TPTVN1PROD with * * * * * Dated: December 21, 2012. Richard Cordray, Director, Consumer Financial Protection Bureau. [FR Doc. 2012–31311 Filed 12–28–12; 8:45 am] BILLING CODE 4810–AM–P VerDate Mar<15>2010 01:38 Dec 29, 2012 Jkt 229001 Comptroller of the Currency 12 CFR Part 3 Minimum Capital Ratios; Issuance of Directives CFR Correction In Title 12 of the Code of Federal Regulations, Parts 1 to 199, revised as of January 1, 2012, on page 52, in appendix C to Part 3, Part I, Section 1 is revised to read as follows: Appendix C to Part 3—Capital Adequacy Guidelines for Banks: Internal-Ratings-Based and Advanced Measurement Approaches * * * * * Part I. General Provisions Authority and Issuance For the reasons set forth in the preamble, the Bureau of Consumer Financial Protection amends 12 CFR part 1003 as follows: * DEPARTMENT OF THE TREASURY Section 1. Purpose, Applicability, Reservation of Authority, and Principle of Conservatism (a) Purpose. This appendix establishes: (1) Minimum qualifying criteria for banks using bank-specific internal risk measurement and management processes for calculating risk-based capital requirements; (2) Methodologies for such banks to calculate their risk-based capital requirements; and (3) Public disclosure requirements for such banks. (b) Applicability. (1) This appendix applies to a bank that: (i) Has consolidated assets, as reported on the most recent year-end Consolidated Report of Condition and Income (Call Report) equal to $250 billion or more; (ii) Has consolidated total on-balance sheet foreign exposure at the most recent year-end equal to $10 billion or more (where total onbalance sheet foreign exposure equals total cross-border claims less claims with head office or guarantor located in another country plus redistributed guaranteed amounts to the country of head office or guarantor plus local country claims on local residents plus revaluation gains on foreign exchange and derivative products, calculated in accordance with the Federal Financial Institutions Examination Council (FFIEC) 009 Country Exposure Report); (iii) Is a subsidiary of a depository institution that uses 12 CFR part 3, appendix C, 12 CFR part 208, appendix F, 12 CFR part 325, appendix D, or 12 CFR part 567, appendix C, to calculate its risk-based capital requirements; or (iv) Is a subsidiary of a bank holding company that uses 12 CFR part 225, appendix G, to calculate its risk-based capital requirements. (2) Any bank may elect to use this appendix to calculate its risk-based capital requirements. (3) A bank that is subject to this appendix must use this appendix unless the OCC determines in writing that application of this appendix is not appropriate in light of the bank’s asset size, level of complexity, risk PO 00000 Frm 00032 Fmt 4700 Sfmt 4700 profile, or scope of operations. In making a determination under this paragraph, the OCC will apply notice and response procedures in the same manner and to the same extent as the notice and response procedures in 12 CFR 3.12. (c) Reservation of authority—(1) Additional capital in the aggregate. The OCC may require a bank to hold an amount of capital greater than otherwise required under this appendix if the OCC determines that the bank’s risk-based capital requirement under this appendix is not commensurate with the bank’s credit, market, operational, or other risks. In making a determination under this paragraph, the OCC will apply notice and response procedures in the same manner and to the same extent as the notice and response procedures in 12 CFR 3.12. (2) Specific risk-weighted asset amounts. (i) If the OCC determines that the risk-weighted asset amount calculated under this appendix by the bank for one or more exposures is not commensurate with the risks associated with those exposures, the OCC may require the bank to assign a different risk-weighted asset amount to the exposures, to assign different risk parameters to the exposures (if the exposures are wholesale or retail exposures), or to use different model assumptions for the exposures (if relevant), all as specified by the OCC. (ii) If the OCC determines that the riskweighted asset amount for operational risk produced by the bank under this appendix is not commensurate with the operational risks of the bank, the OCC may require the bank to assign a different risk-weighted asset amount for operational risk, to change elements of its operational risk analytical framework, including distributional and dependence assumptions, or to make other changes to the bank’s operational risk management processes, data and assessment systems, or quantification systems, all as specified by the OCC. (3) Regulatory capital treatment of unconsolidated entities. If the OCC determines that the capital treatment for a bank’s exposure or other relationship to an entity not consolidated on the bank’s balance sheet is not commensurate with the actual risk relationship of the bank to the entity, for risk-based capital purposes, it may require the bank to treat the entity as if it were consolidated onto the bank’s balance sheet and require the bank to hold capital against the entity’s exposures. The OCC will look to the substance of and risk associated with the transaction as well as other relevant factors the OCC deems appropriate in determining whether to require such treatment and in determining the bank’s compliance with minimum risk-based capital requirements. In making a determination under this paragraph, the OCC will apply notice and response procedures in the same manner and to the same extent as the notice and response procedures in 12 CFR 3.12. (4) Other supervisory authority. Nothing in this appendix limits the authority of the OCC under any other provision of law or regulation to take supervisory or enforcement action, including action to address unsafe or unsound practices or conditions, deficient capital levels, or violations of law. E:\FR\FM\31DER1.SGM 31DER1 Federal Register / Vol. 77, No. 250 / Monday, December 31, 2012 / Rules and Regulations (d) Principle of conservatism. Notwithstanding the requirements of this appendix, a bank may choose not to apply a provision of this appendix to one or more exposures, provided that: (1) The bank can demonstrate on an ongoing basis to the satisfaction of the OCC that not applying the provision would, in all circumstances, unambiguously generate a risk-based capital requirement for each such exposure greater than that which would otherwise be required under this appendix; (2) The bank appropriately manages the risk of each such exposure; (3) The bank notifies the OCC in writing prior to applying this principle to each such exposure; and (4) The exposures to which the bank applies this principle are not, in the aggregate, material to the bank. * * * * * [FR Doc. 2012–31485 Filed 12–28–12; 8:45 am] BILLING CODE 1505–01–D DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 32 [Docket ID OCC–2012–0007] RIN 1557–AD59 Lending Limits Office of the Comptroller of the Currency, Treasury. ACTION: Final rule. AGENCY: The Office of the Comptroller of the Currency (OCC) is amending its lending limits rule to extend the rule’s temporary exception for credit exposures arising from a derivative transaction or securities financing transaction from January 1, 2013 to July 1, 2013. DATES: This final rule is effective December 31, 2012. The effective date of amendatory instruction 3a of the interim final rule published on June 21, 2012, 77 FR 37277, is delayed from January 1, 2013 to July 1, 2013. FOR FURTHER INFORMATION CONTACT: Jonathan Fink, Assistant Director, Bank Activities and Structure Division, (202) 649–5593; Heidi M. Thomas, Special Counsel, Legislative and Regulatory Activities Division, (202) 649–5490; or Kurt Wilhelm, Director for Financial Markets, (202) 649–6437, Office of the Comptroller of the Currency, Washington, DC 20219. SUPPLEMENTARY INFORMATION: ebenthall on DSK5TPTVN1PROD with SUMMARY: I. Description of Final Rule Section 5200 of the Revised Statutes, 12 U.S.C. 84, provides that the total loans and extensions of credit by a VerDate Mar<15>2010 01:38 Dec 29, 2012 Jkt 229001 national bank to a person outstanding at one time shall not exceed 15 percent of the unimpaired capital and unimpaired surplus of the bank if the loan or extension of credit is not fully secured, plus an additional 10 percent of unimpaired capital and unimpaired surplus if the loan is fully secured. Section 5(u)(1) of the Home Owners’ Loan Act (HOLA), 12 U.S.C. 1464(u)(1), provides that section 5200 of the Revised Statutes ‘‘shall apply to savings associations in the same manner and to the same extent as it applies to national banks.’’ In addition, section 5(u)(2) of HOLA, 12 U.S.C. 1464(u)(2), includes exceptions to the lending limits for certain loans made by savings associations. These HOLA provisions apply to both Federal and statechartered savings associations. Section 610 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 1 (Dodd-Frank Act) amended section 5200 of the Revised Statutes to provide that the definition of ‘‘loans and extensions of credit’’ includes any credit exposure to a person arising from a derivative transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction between a national bank and that person. This amendment was effective July 21, 2012. By virtue of section 5(u)(1) of the HOLA, this new definition of ‘‘loans and extensions of credit’’ applies to all savings associations as well as to national banks. On June 21, 2012, the OCC published in the Federal Register an interim final rule that, among other things, amended the OCC’s lending limits regulation, 12 CFR part 32, by implementing section 610 of the Dodd-Frank Act.2 Specifically, the interim final rule amended part 32 to provide national banks and savings associations with different options for measuring the appropriate credit exposures of derivatives transactions and securities financing transactions, including an internal model option. The interim final rule was effective on July 21, 2012. Because the OCC recognized that national banks and savings associations would need additional time to comply with these new provisions, the interim final rule provided at 12 CFR 32.1(d) that the requirements of part 32 only apply to a credit exposure arising from a derivative transaction or securities 1 Public 2 77 PO 00000 Law 111–203, 124 Stat. 1376 (2010). FR 37265 (June 21, 2012). Frm 00033 Fmt 4700 Sfmt 4700 76841 financing transaction on or after January 1, 2013.3 Based on the public comments received on the interim final rule, the OCC concludes that institutions that wish to use an internal model method to determine credit exposure for derivative transactions and securities financing transactions may not have sufficient time to develop a model, receive approval for its use, and implement the model before the January 1, 2013 expiration of the temporary exception. Moreover, for many institutions with large portfolios, the other non-model methods to measure credit exposure provided by the rule often would not be optimal. For the foregoing reasons, the OCC is extending this exception to July 1, 2013,4 in advance of finalizing the interim final rule. As indicated in the preamble to the interim final rule, notwithstanding this extension, the OCC retains full authority to address credit exposures that present undue concentrations on a case-by-case basis through our existing safety and soundness authorities. II. Notice and Comment This final rule is effective on December 31, 2012. Pursuant to the Administrative Procedure Act (APA), at 5 U.S.C. 553(b)(B), notice and comment are not required prior to the issuance of a final rule if an agency, for good cause, finds that ‘‘notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’’ This final rule extends the temporary exception from the lending limits rules for extensions of credit arising from derivative transactions or securities financing transactions from January 1, 2013 to July 1, 2013 in order to provide national banks and savings associations with additional time to comply with these provisions. The rule makes no substantive changes to the lending limits rule. Furthermore, on November 16, 2012, the OCC announced its intention to extend this temporary exception,5 thereby giving notice to 3 The interim final rule also removed from the lending limits rule the securities reverse repurchase provision, redesignated as § 32.2(q)(1)(vii), on January 1, 2013 to correspond to the expiration of the exception for the section 610-related provisions. This final rule changes the date of this removal to July 1, 2013 as a conforming change. 4 The OCC issued OCC Bulletin 2012–36 on November 16, 2012, to provide notice prior to finalizing the interim final rule of its intention to extend the exception to April 1, 2013 so that national banks and savings associations could adjust their preparations for compliance accordingly. Since then, the OCC has determined that it is more appropriate to extend the exception to July 1, 2013. 5 See OCC Bulletin 2012–36. E:\FR\FM\31DER1.SGM 31DER1

Agencies

[Federal Register Volume 77, Number 250 (Monday, December 31, 2012)]
[Rules and Regulations]
[Pages 76840-76841]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-31485]


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DEPARTMENT OF THE TREASURY

Comptroller of the Currency

12 CFR Part 3


Minimum Capital Ratios; Issuance of Directives

CFR Correction

    In Title 12 of the Code of Federal Regulations, Parts 1 to 199, 
revised as of January 1, 2012, on page 52, in appendix C to Part 3, 
Part I, Section 1 is revised to read as follows:

Appendix C to Part 3--Capital Adequacy Guidelines for Banks: Internal-
Ratings-Based and Advanced Measurement Approaches

* * * * *

Part I. General Provisions

Section 1. Purpose, Applicability, Reservation of Authority, and 
Principle of Conservatism

    (a) Purpose. This appendix establishes:
    (1) Minimum qualifying criteria for banks using bank-specific 
internal risk measurement and management processes for calculating 
risk-based capital requirements;
    (2) Methodologies for such banks to calculate their risk-based 
capital requirements; and
    (3) Public disclosure requirements for such banks.
    (b) Applicability. (1) This appendix applies to a bank that:
    (i) Has consolidated assets, as reported on the most recent 
year-end Consolidated Report of Condition and Income (Call Report) 
equal to $250 billion or more;
    (ii) Has consolidated total on-balance sheet foreign exposure at 
the most recent year-end equal to $10 billion or more (where total 
on-balance sheet foreign exposure equals total cross-border claims 
less claims with head office or guarantor located in another country 
plus redistributed guaranteed amounts to the country of head office 
or guarantor plus local country claims on local residents plus 
revaluation gains on foreign exchange and derivative products, 
calculated in accordance with the Federal Financial Institutions 
Examination Council (FFIEC) 009 Country Exposure Report);
    (iii) Is a subsidiary of a depository institution that uses 12 
CFR part 3, appendix C, 12 CFR part 208, appendix F, 12 CFR part 
325, appendix D, or 12 CFR part 567, appendix C, to calculate its 
risk-based capital requirements; or
    (iv) Is a subsidiary of a bank holding company that uses 12 CFR 
part 225, appendix G, to calculate its risk-based capital 
requirements.
    (2) Any bank may elect to use this appendix to calculate its 
risk-based capital requirements.
    (3) A bank that is subject to this appendix must use this 
appendix unless the OCC determines in writing that application of 
this appendix is not appropriate in light of the bank's asset size, 
level of complexity, risk profile, or scope of operations. In making 
a determination under this paragraph, the OCC will apply notice and 
response procedures in the same manner and to the same extent as the 
notice and response procedures in 12 CFR 3.12.
    (c) Reservation of authority--(1) Additional capital in the 
aggregate. The OCC may require a bank to hold an amount of capital 
greater than otherwise required under this appendix if the OCC 
determines that the bank's risk-based capital requirement under this 
appendix is not commensurate with the bank's credit, market, 
operational, or other risks. In making a determination under this 
paragraph, the OCC will apply notice and response procedures in the 
same manner and to the same extent as the notice and response 
procedures in 12 CFR 3.12.
    (2) Specific risk-weighted asset amounts. (i) If the OCC 
determines that the risk-weighted asset amount calculated under this 
appendix by the bank for one or more exposures is not commensurate 
with the risks associated with those exposures, the OCC may require 
the bank to assign a different risk-weighted asset amount to the 
exposures, to assign different risk parameters to the exposures (if 
the exposures are wholesale or retail exposures), or to use 
different model assumptions for the exposures (if relevant), all as 
specified by the OCC.
    (ii) If the OCC determines that the risk-weighted asset amount 
for operational risk produced by the bank under this appendix is not 
commensurate with the operational risks of the bank, the OCC may 
require the bank to assign a different risk-weighted asset amount 
for operational risk, to change elements of its operational risk 
analytical framework, including distributional and dependence 
assumptions, or to make other changes to the bank's operational risk 
management processes, data and assessment systems, or quantification 
systems, all as specified by the OCC.
    (3) Regulatory capital treatment of unconsolidated entities. If 
the OCC determines that the capital treatment for a bank's exposure 
or other relationship to an entity not consolidated on the bank's 
balance sheet is not commensurate with the actual risk relationship 
of the bank to the entity, for risk-based capital purposes, it may 
require the bank to treat the entity as if it were consolidated onto 
the bank's balance sheet and require the bank to hold capital 
against the entity's exposures. The OCC will look to the substance 
of and risk associated with the transaction as well as other 
relevant factors the OCC deems appropriate in determining whether to 
require such treatment and in determining the bank's compliance with 
minimum risk-based capital requirements. In making a determination 
under this paragraph, the OCC will apply notice and response 
procedures in the same manner and to the same extent as the notice 
and response procedures in 12 CFR 3.12.
    (4) Other supervisory authority. Nothing in this appendix limits 
the authority of the OCC under any other provision of law or 
regulation to take supervisory or enforcement action, including 
action to address unsafe or unsound practices or conditions, 
deficient capital levels, or violations of law.

[[Page 76841]]

    (d) Principle of conservatism. Notwithstanding the requirements 
of this appendix, a bank may choose not to apply a provision of this 
appendix to one or more exposures, provided that:
    (1) The bank can demonstrate on an ongoing basis to the 
satisfaction of the OCC that not applying the provision would, in 
all circumstances, unambiguously generate a risk-based capital 
requirement for each such exposure greater than that which would 
otherwise be required under this appendix;
    (2) The bank appropriately manages the risk of each such 
exposure;
    (3) The bank notifies the OCC in writing prior to applying this 
principle to each such exposure; and
    (4) The exposures to which the bank applies this principle are 
not, in the aggregate, material to the bank.
* * * * *
[FR Doc. 2012-31485 Filed 12-28-12; 8:45 am]
BILLING CODE 1505-01-D