Proposed Agency Information Collection Activities; Comment Request, 53227-53241 [2019-21659]
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Federal Register / Vol. 84, No. 193 / Friday, October 4, 2019 / Notices
FMCSA ensures that PII in the
National Registry system is protected by
reasonable security safeguards against
loss or unauthorized access, destruction,
usage, modification, or disclosure.
These safeguards incorporate standards
and practices required for Federal
information systems under the Federal
Information System Management Act
and are detailed in Federal Information
Processing Standards Publication 200,
Minimum Security Requirements for
Federal Information and Information
Systems, dated March 2006, NIST
Special Publication 800–53 Rev. 3, and
Recommended Security Controls for
Federal Information Systems and
Organizations, dated August 2009.
FMCSA has a comprehensive
information security program that
contains management, operational, and
technical safeguards that are appropriate
for the protection of PII. These
safeguards are designed to achieve the
following objectives:
• Ensure the security, integrity, and
confidentiality of PII
• Protect against any reasonably
anticipated threats or hazards to the
security or integrity of PII
• Protect against unauthorized access
to or use of PII
The National Registry is more
thoroughly in the associated Privacy
Impact Assessment (PIA). The PIA can
be found on the DOT Privacy website at
https://transportation.gov/privacy. This
updated system will be included in
DOT’s inventory of record systems.
10. You must sign your request, and
your signature must either be notarized
or submitted under 28 U.S.C. 1746, a
law that permits statements to be made
under penalty of perjury as a substitute
for notarization. While no specific form
is required, you may obtain forms for
this purpose from the Chief Freedom of
Information Act Officer, https://
www.transportation.gov/foia or
202.366.4542. In addition you should
provide the following:
An explanation of why you believe
the Department would have information
on you;
• Identify which component(s) of the
Department you believe may have the
information about you;
• Specify when you believe the
records would have been created;
• Provide any other information that
will help the FOIA staff determine
which DOT component agency may
have responsive records; and
If your request is seeking records
pertaining to another living individual,
you must include a statement from that
individual certifying his/her agreement
for you to access his/her records.
Without this bulleted information the
component(s) may not be able to
conduct an effective search, and your
request may be denied due to lack of
specificity or lack of compliance with
applicable regulations.
EXEMPTIONS CLAIMED FOR THE SYSTEM:
None.
HISTORY:
RECORD ACCESS PROCEDURES:
77 FR 24247—April 23, 2012.
See ‘‘Notification procedure’’ above.
CONTESTING RECORD PROCEDURES:
DISCLOSURE TO CONSUMER REPORTING
AGENCIES:
None.
See ‘‘Notification procedure’’ above.
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NOTIFICATION PROCEDURES:
Individuals seeking notification of
and access to any record contained in
this system of records, or seeking to
contest its content, may submit a
request in writing to the DOT FOIA
officer whose contact information can
be found at https://
www.transportation.gov/foia under
‘‘Contact Us.’’ If an individual believes
more than one component maintains
Privacy Act records concerning him or
her, the individual may submit the
request to the Departmental Freedom of
Information Act Office, U.S. Department
of Transportation, Room W94–122, 1200
New Jersey Ave. SE, Washington, DC
20590, ATTN: Privacy Act request.
When seeking records about yourself
from this system of records or any other
Departmental system of records your
request must conform with the Privacy
Act regulations set forth in 49 CFR part
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Issued in Washington, DC, on September
27, 2019.
Claire W. Barrett,
Departmental Chief Privacy Officer.
[FR Doc. 2019–21412 Filed 10–3–19; 8:45 am]
BILLING CODE 4910–9X–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE
CORPORATION
Proposed Agency Information
Collection Activities; Comment
Request
Office of the Comptroller of the
Currency (OCC), Treasury; Board of
AGENCY:
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Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Joint notice and request for
comment.
In accordance with the
requirements of the Paperwork
Reduction Act of 1995 (PRA), the OCC,
the Board, and the FDIC (the
‘‘agencies’’) may not conduct or
sponsor, and the respondent is not
required to respond to, an information
collection unless it displays a currently
valid Office of Management and Budget
(OMB) control number. The Federal
Financial Institutions Examination
Council (FFIEC), of which the agencies
are members, has approved the
agencies’ publication for public
comment of a proposal to revise and
extend the Consolidated Reports of
Condition and Income (Call Reports)
(FFIEC 031, FFIEC 041, and FFIEC 051)
and the Regulatory Capital Reporting for
Institutions Subject to the Advanced
Capital Adequacy Framework (FFIEC
101), which are currently approved
collections of information. The
proposed revisions to the Call Reports
and the FFIEC 101 would implement
various changes to the agencies’ capital
rule that the agencies have finalized or
are considering finalizing. In addition,
the agencies are proposing a change in
the scope of the FFIEC 031 Call Report
as well as an instructional revision for
the reporting of operating lease
liabilities in the Call Reports, both of
which would take effect March 31,
2020, and a Call Report instructional
revision for home equity lines of credit
that convert from revolving to nonrevolving status that would take effect
March 31, 2021.
DATES: Comments must be submitted on
or before December 3, 2019.
ADDRESSES: Interested parties are
invited to submit written comments to
any or all of the agencies. All comments,
which should refer to the ‘‘Call Report
and FFIEC 101 Reporting Revisions,’’
will be shared among the agencies.
OCC: You may submit comments,
which should refer to ‘‘Call Report and
FFIEC 101 Reporting Revisions,’’ by any
of the following methods:
• Email: prainfo@occ.treas.gov.
• Mail: Chief Counsel’s Office, Office
of the Comptroller of the Currency,
Attention: 1557–0081 and 1557–0239,
400 7th Street SW, Suite 3E–218,
Washington, DC 20219.
• Hand Delivery/Courier: 400 7th
Street SW, Suite 3E–218, Washington,
DC 20219.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘1557–
SUMMARY:
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0081 and 1557–0239’’ in your comment.
In general, the OCC will publish
comments on www.reginfo.gov without
change, including any business or
personal information provided, such as
name and address information, email
addresses, or phone numbers.
Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
information collection beginning on the
date of publication of the second notice
for this collection by any of the
following methods:
• Viewing Comments Electronically:
Go to www.reginfo.gov. Click on the
‘‘Information Collection Review’’ tab.
Underneath the ‘‘Currently under
Review’’ section heading, from the dropdown menu select ‘‘Department of
Treasury’’ and then click ‘‘submit.’’ This
information collection can be located by
searching by OMB control number
‘‘1557–0081’’ or ‘‘1557–0239.’’ Upon
finding the appropriate information
collection, click on the related ‘‘ICR
Reference Number.’’ On the next screen,
select ‘‘View Supporting Statement and
Other Documents’’ and then click on the
link to any comment listed at the bottom
of the screen.
• For assistance in navigating
www.reginfo.gov, please contact the
Regulatory Information Service Center
at (202) 482–7340.
• Viewing Comments Personally: You
may personally inspect comments at the
OCC, 400 7th Street SW, Washington,
DC. For security reasons, the OCC
requires that visitors make an
appointment to inspect comments. You
may do so by calling (202) 649–6700 or,
for persons who are deaf or hearing
impaired, TTY, (202) 649–5597. Upon
arrival, visitors will be required to
present valid government-issued photo
identification and submit to security
screening in order to inspect comments.
Board: You may submit comments,
which should refer to ‘‘Call Report and
FFIEC 101 Reporting Revisions,’’ by any
of the following methods:
• Agency Website: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at:
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Email: regs.comments@
federalreserve.gov. Include ‘‘Call Report
and FFIEC 101 Reporting Revisions’’ in
the subject line of the message.
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• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments are available on
the Board’s website at https://
www.federalreserve.gov/apps/foia/
proposedregs.aspx as submitted, unless
modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper in Room 146, 1709 New York
Avenue NW, Washington, DC 20006,
between 9:00 a.m. and 5:00 p.m. on
weekdays. For security reasons, the
Board requires that visitors make an
appointment to inspect comments. You
may do so by calling (202) 452–3684.
Upon arrival, visitors will be required to
present valid government-issued photo
identification and to submit to security
screening in order to inspect and
photocopy comments.
FDIC: You may submit comments,
which should refer to ‘‘Call Report and
FFIEC 101 Reporting Revisions,’’ by any
of the following methods:
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the FDIC’s website.
• Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Email: comments@FDIC.gov.
Include ‘‘Call Report and FFIEC 101
Reporting Revisions’’ in the subject line
of the message.
• Mail: Manuel E. Cabeza, Counsel,
Attn: Comments, Room MB–3128,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429.
• Hand Delivery: Comments may be
hand delivered to the guard station at
the rear of the 550 17th Street Building
(located on F Street) on business days
between 7:00 a.m. and 5:00 p.m.
• Public Inspection: All comments
received will be posted without change
to https://www.fdic.gov/regulations/
laws/federal/ including any personal
information provided. Paper copies of
public comments may be requested from
the FDIC Public Information Center,
3501 North Fairfax Drive, Arlington, VA
22226, or by telephone at (877) 275–
3342 or (703) 562–2200.
Additionally, commenters may send a
copy of their comments to the OMB
desk officer for the agencies by mail to
the Office of Information and Regulatory
Affairs, U.S. Office of Management and
Budget, New Executive Office Building,
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Room 10235, 725 17th Street NW,
Washington, DC 20503; by fax to (202)
395–6974; or by email to oira_
submission@omb.eop.gov.
FOR FURTHER INFORMATION CONTACT: For
further information about the proposed
revisions to the information collections
discussed in this notice, please contact
any of the agency staff whose names
appear below. In addition, copies of the
report forms for the Call Report and the
FFIEC 101 can be obtained at the
FFIEC’s website (https://www.ffiec.gov/
ffiec_report_forms.htm).
OCC: Kevin Korzeniewski, Counsel,
Chief Counsel’s Office, (202) 649–5490,
or for persons who are deaf or hearing
impaired, TTY, (202) 649–5597.
Board: Nuha Elmaghrabi, Federal
Reserve Board Clearance Officer, (202)
452–3884, Office of the Chief Data
Officer, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551.
Telecommunications Device for the Deaf
(TDD) users may call (202) 263–4869.
FDIC: Manuel E. Cabeza, Counsel,
(202) 898–3767, Legal Division, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Affected Reports
A. Call Reports
B. FFIEC 101
II. Current Actions
A. Simplifications Rule
1. Background
2. Proposed Revisions to Call Report
Schedule RC–R
B. Community Bank Leverage Ratio Rule
1. Background
2. Proposed Revisions to Call Report
Schedule RC–R
3. Other Proposed Call Report Revisions
Related to the CBLR
C. Proposed Tailoring Rules
1. Background
2. Proposed Revisions to Call Report
Schedule RC–R, Part I
3. Proposed Revisions to the FFIEC 101
D. Proposed Total Loss Absorbing Capacity
Holdings Rule
1. Background
2. Proposed Revisions to Call Report
Schedule RC–R, Part I
3. Proposed Revisions to Call Report
Schedule RC–R, Part II
4. Proposed Revisions to FFIEC 101
Schedule A
i. Deductions From Regulatory Capital
ii. LTD and TLAC Amounts, Ratios, and
Buffer
E. Proposed Revisions to the
Supplementary Leverage Ratio for
Certain Central Bank Deposits of
Custodial Banks
1. Background
2. Proposed Revisions to Call Report
Schedule RC–R, Part I
3. Proposed Revisions to FFIEC 101
Schedule A
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F. Proposed Standardized Approach for
Counterparty Credit Risk on Derivative
Contracts
1. Background
2. Proposed Revisions to Call Report
Schedule RC–R, Part II
3. Proposed Revisions to FFIEC 101
Schedule A, SLR Table 2
G. High Volatility Commercial Real Estate
(HVCRE) Land Development Proposal
1. Background
2. Proposed Revisions to Call Report
Schedule RC–R, Part II
3. Proposed Revisions to FFIEC 101
Schedule G
H. Operating Lease Liabilities
I. Reporting Home Equity Lines of Credit
That Convert From Revolving to NonRevolving Status
III. Timing
IV. Request for Comment
I. Affected Reports
All of the proposed changes discussed
below affect the Call Reports, while a
number of the changes also affect the
FFIEC 101. The Board will separately
propose to make corresponding
revisions to the Consolidated Financial
Statements for Holding Companies (FR
Y–9C).1
A. Call Reports
The agencies propose to extend for
three years, with revision, the FFIEC
031, FFIEC 041, and FFIEC 051 Call
Reports.
Report Title: Consolidated Reports of
Condition and Income (Call Report).
Form Number: FFIEC 031
(Consolidated Reports of Condition and
Income for a Bank with Domestic and
Foreign Offices), FFIEC 041
(Consolidated Reports of Condition and
Income for a Bank with Domestic
Offices Only, and FFIEC 051
(Consolidated Reports of Condition and
Income for a Bank with Domestic
Offices Only and Total Assets Less Than
$5 Billion).
Frequency of Response: Quarterly.
Affected Public: Business or other forprofit.
Type of Review: Revision and
extension of currently approved
collections.
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OCC
OMB Control No.: 1557–0081.
Estimated Number of Respondents:
1,152 national banks and federal savings
associations.
Estimated Average Burden per
Response: 39.74 burden hours per
quarter to file.
Estimated Total Annual Burden:
183,122 burden hours to file.
1 Consolidated
Financial Statements for Holding
Companies (FR Y–9C), OMB Number 7100–0128.
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Board
OMB Control No.: 7100–0036.
Estimated Number of Respondents:
781 state member banks.
Estimated Average Burden per
Response: 43.64 burden hours per
quarter to file.
Estimated Total Annual Burden:
136,331 burden hours to file.
FDIC
OMB Control No.: 3064–0052.
Estimated Number of Respondents:
3,419 insured state nonmember banks
and state savings associations.
Estimated Average Burden per
Response: 38.47 burden hours per
quarter to file.
Estimated Total Annual Burden:
526,116 burden hours to file.
The estimated average burden hours
collectively reflect the estimates for the
FFIEC 051, the FFIEC 041, and the
FFIEC 031 reports for each agency.
When the estimates are calculated by
type of report across the agencies, the
estimated average burden hours per
quarter are 35.38 (FFIEC 051), 49.45
(FFIEC 041), and 95.06 (FFIEC 031). The
estimated burden hours for the currently
approved reports are 40.27 (FFIEC 051),
53.72 (FFIEC 041), and 95.60 (FFIEC
031), so the revisions proposed in this
notice would represent a reduction in
estimated average burden hours per
quarter of 4.89 (FFIEC 051), 4.27 (FFIEC
041), and 0.54 (FFIEC 031). The change
in burden is predominantly due to
changes associated with the community
bank leverage ratio rule. The reduction
in average burden hours is significantly
less for the FFIEC 031 than for the
FFIEC 041 or the FFIEC 051 because
greater percentages of institutions that
would be eligible to report under the
proposed community bank leverage
ratio framework currently file the FFIEC
041 or the FFIEC 051 than the FFIEC
031.2 The estimated burden per
response for the quarterly filings of the
Call Report is an average that varies by
agency because of differences in the
composition of the institutions under
each agency’s supervision (e.g., size
distribution of institutions, types of
activities in which they are engaged,
and existence of foreign offices).
Type of Review: Extension and
revision of currently approved
collections.
Legal Basis and Need for Collections
The Call Report information
collections are mandatory: 12 U.S.C. 161
(for national banks), 12 U.S.C. 324 (for
2 For estimating burden hours, the agencies
assumed 60 percent of eligible institutions would
use the framework.
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53229
state member banks), 12 U.S.C. 1817 (for
insured state nonmember commercial
and savings banks), and 12 U.S.C. 1464
(for federal and state savings
associations). At present, except for
selected data items and text, these
information collections are not given
confidential treatment.
Banks and savings associations
submit Call Report data to the agencies
each quarter for the agencies’ use in
monitoring the condition, performance,
and risk profile of individual
institutions and the industry as a whole.
Call Report data serve a regulatory or
public policy purpose by assisting the
agencies in fulfilling their shared
missions of ensuring the safety and
soundness of financial institutions and
the financial system and protecting
consumer financial rights, as well as
agency-specific missions affecting
national and state-chartered institutions,
such as conducting monetary policy,
ensuring financial stability, and
administering federal deposit insurance.
Call Reports are the source of the most
current statistical data available for
identifying areas of focus for on-site and
off-site examinations. Among other
purposes, the agencies use Call Report
data in evaluating institutions’ corporate
applications, including interstate merger
and acquisition applications for which
the agencies are required by law to
determine whether the resulting
institution would control more than 10
percent of the total amount of deposits
of insured depository institutions in the
United States. Call Report data also are
used to calculate institutions’ deposit
insurance assessments and national
banks’ and federal savings associations’
semiannual assessment fees.
B. FFIEC 101
The agencies propose to extend for
three years, with revision, the FFIEC
101 report.
Report Title: Risk-Based Capital
Reporting for Institutions Subject to the
Advanced Capital Adequacy
Framework.
Form Number: FFIEC 101.
Frequency of Response: Quarterly.
Affected Public: Business or other forprofit.
OCC
OMB Control No.: 1557–0239.
Estimated Number of Respondents: 8
national banks and federal savings
associations.
Estimated Time per Response: 674
burden hours per quarter to file for
banks and federal savings associations.
Estimated Total Annual Burden:
21,568 burden hours to file.
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Board
OMB Control No.: 7100–0319.
Estimated Number of Respondents: 1
state member bank; 4 bank holding
companies and savings and loan
holding companies that complete
Supplementary Leverage Ratio (SLR)
Tables 1 and 2 only; 9 other bank
holding companies and savings and
loan holding companies; and 6
intermediate holding companies.
Estimated Time per Response: 674
burden hours per quarter to file for state
member banks; 3 burden hours per
quarter to file for bank holding
companies and savings and loan
holding companies that complete
Supplementary Leverage Ratio (SLR)
Tables 1 and 2 only; 677 burden hours
per quarter to file for other bank holding
companies and savings and loan
holding companies; and 3 burden hours
per quarter to file for intermediate
holding companies.
Estimated Total Annual Burden:
2,696 burden hours for state member
banks to file; 48 burden hours for bank
holding companies and savings and
loan holding companies that complete
Supplementary Leverage Ratio (SLR)
Tables 1 and 2 only to file; 24,372
burden hours for other bank holding
companies and savings and loan
holding companies to file; and 72
burden hours for intermediate holding
companies to file.
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FDIC
OMB Control No.: 3064–0159.
Estimated Number of Respondents: 1
insured state nonmember bank and state
savings association.
Estimated Time per Response: 674
burden hours per quarter to file.
Estimated Total Annual Burden:
2,696 burden hours to file.
Type of Review: Extension and
revision of currently approved
collections.
Legal Basis and Need for Collections
Each advanced approaches
institution 3 is required to report
quarterly regulatory capital data on the
FFIEC 101. The FFIEC 101 information
collections are mandatory for advanced
approaches institutions: 12 U.S.C. 161
(national banks), 12 U.S.C. 324 (state
member banks), 12 U.S.C. 1844(c) (bank
holding companies), 12 U.S.C. 1467a(b)
(savings and loan holding companies),
12 U.S.C. 1817 (insured state
nonmember commercial and savings
banks), 12 U.S.C. 1464 (savings
associations), and 12 U.S.C. 1844(c),
3106, and 3108 (intermediate holding
3 See 12 CFR 3.100(b) (OCC); 12 CFR 217.100(b)
(Board); 12 CFR 324.100(b) (FDIC).
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companies). Certain data items in this
information collection are given
confidential treatment under 5 U.S.C.
552(b)(4) and (8).
The agencies use data reported in the
FFIEC 101 to assess and monitor the
levels and components of each reporting
entity’s capital requirements and the
adequacy of the entity’s capital under
the Advanced Capital Adequacy
Framework; 4 to evaluate the impact of
the Advanced Capital Adequacy
Framework on individual reporting
entities and on an industry-wide basis
and its competitive implications; and to
supplement on-site examination
processes. The reporting schedules also
assist advanced approaches institutions
in understanding expectations relating
to the system development necessary for
implementation and validation of the
Advanced Capital Adequacy
Framework. Submitted data that are
released publicly will also provide other
interested parties with information
about advanced approaches institutions’
regulatory capital.
II. Current Actions
A. Simplifications Rule
1. Background
On July 22, 2019, the agencies
published a final rule amending their
regulatory capital rule 5 to make a
number of burden-reducing changes to
the capital rule (simplifications rule).6
In the simplifications rule, the agencies
adopted a simpler methodology for nonadvanced approaches banking
organizations 7 to calculate minority
interest limitations and simplified the
regulatory capital treatment of mortgage
servicing assets (MSAs), temporary
difference deferred tax assets (DTAs),
and investments in the capital of
unconsolidated financial institutions.
The simplifications rule had an effective
date of April 1, 2020. However, the
FDIC and the OCC have recently
approved,8 and the Board is
considering, a planned final rule that
would permit non-advanced approaches
banking organizations to implement the
4 12 CFR part 3, subpart E (OCC); 12 CFR part 217,
subpart E (Board); 12 CFR part 324, subpart E
(FDIC).
5 12 CFR part 3 (OCC); 12 CFR part 217 (Board);
12 CFR part 324 (FDIC). While the agencies have
codified the capital rule in different parts of title 12
of the Code of Federal Regulations, the internal
structure of the sections within each agency’s rule
are substantially similar.
6 84 FR 35234 (July 22, 2019).
7 Non-advanced approaches banking
organizations are institutions that do not meet the
criteria in 12 CFR 3.100(b) (OCC); 12 CFR
217.100(b) (Board); or 12 CFR 324.100(b) (FDIC).
8 See FDIC Press Release 80–2019, dated
September 17, 2019.
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simplifications rule on January 1, 2020.
As a result, non-advanced approaches
banking organizations would have the
option to implement the simplifications
rule on the revised effective date of
January 1, 2020, or wait until the quarter
beginning April 1, 2020.
The agencies propose revisions to Call
Report Schedule RC–R, Regulatory
Capital, in all three versions of the Call
Report to implement the associated
changes to the agencies’ regulatory
capital rule effective as of the March 31,
2020, report date, consistent with the
planned final rule that would permit
early adoption of the simplifications
rule.
In addition, the agencies adopted a
number of technical amendments to
their regulatory capital rule in the
simplifications rule that do not require
clearance under the PRA and would
become effective October 1, 2019.
2. Proposed Revisions to Call Report
Schedule RC–R
The revisions in the simplifications
rule would make a number of changes
to the calculation of common equity tier
1 (CET1) capital, additional tier 1
capital, and tier 2 capital for nonadvanced approaches institutions that
do not apply to advanced approaches
institutions. Thus, the simplifications
rule results in different sets of
calculations for these tiers of regulatory
capital for non-advanced approaches
institutions and advanced approaches
institutions. At present, the FFIEC 031
and the FFIEC 041 Call Reports are
completed by both non-advanced
approaches institutions and advanced
approaches institutions while only nonadvanced approaches institutions are
eligible to file the FFIEC 051 Call
Report. To mitigate the complexity of
revising existing Schedule RC–R, Part I,
Regulatory Capital Components and
Ratios, to incorporate the different sets
of regulatory capital calculations for
non-advanced approaches institutions
and advanced approaches institutions,
and to reflect the effects of the
simplifications rule in both the FFIEC
031 and FFIEC 041 Call Reports, the
agencies are proposing to require all
advanced approaches institutions to file
the FFIEC 031 Call Report effective as of
the March 31, 2020, report date.9 As a
result, the agencies would adjust the
existing regulatory capital calculations
reported on Schedule RC–R, Part I, for
the FFIEC 041 Call Report, and also for
the FFIEC 051 Call Report, to reflect the
9 While this proposed change relates to existing
advanced approaches institutions, as discussed in
Section II.C. below, the agencies also propose to
require all Category I, II, and III institutions to file
the FFIEC 031 Call Report.
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effects of the simplifications rule for
non-advanced approaches institutions.
For the FFIEC 031 Call Report, which is
filed by the fewest institutions, the
agencies are proposing to incorporate
the two different sets of regulatory
capital calculations (one for nonadvanced approaches institutions and
the other for advanced approaches
institutions) in Schedule RC–R, Part I,
and, as mentioned above, require all
advanced approaches institutions to file
this version of the Call Report.
The agencies propose a number of
revisions that would simplify the capital
calculations on each version of
Schedule RC–R, Part I, effective March
31, 2020, and thereby reduce reporting
burden. Because both non-advanced
approaches institutions and advanced
approaches institutions file the FFIEC
031 Call Report, the FFIEC 031 Call
Report would include two different sets
of calculations (one that incorporates
the effects of the simplifications rule
and the other that does not) in adjacent
columns in the affected portion of
Schedule RC–R, Part I. An institution
would complete only the column for the
set of calculations applicable to that
institution. For the March 31, 2020,
report date, non-advanced approaches
institutions that file the FFIEC 031 Call
Report and elect to adopt the
simplifications rule on January 1, 2020,
would complete the column for the set
of calculations that incorporates the
effects of the simplifications rule. Nonadvanced approaches institutions that
elect to wait to adopt the simplifications
rule on April 1, 2020, and all advanced
approaches institutions would complete
the column for the set of calculations
that does not reflect the effects of the
simplifications rule (i.e., that reflects the
capital calculation in effect for all
institutions before this revision).
Beginning with the June 30, 2020, report
date, all non-advanced approaches
institutions that file the FFIEC 031 Call
Report would complete the column for
the set of calculations that incorporates
the effects of the simplifications rule; all
advanced approaches institutions that
file this Call Report would complete the
column that does not reflect the effects
of the simplifications rule.
Because advanced approaches
institutions currently are not permitted
to file the FFIEC 051 Call Report and
would not be permitted to file the FFIEC
041 Call Report, the FFIEC 041 and
FFIEC 051 Call Reports would include
a single column for the capital
calculation in Schedule RC–R, Part I,
that would be revised effective March
31, 2020, to incorporate the effects of
the simplifications rule. For the March
31, 2020, report date, non-advanced
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approaches institutions that file the
FFIEC 041 or FFIEC 051 Call Report and
elect to adopt the simplifications rule on
January 1, 2020, would complete the
capital calculation column in Schedule
RC–R, Part I, as revised for the
simplifications rule. The agencies
propose to provide instructions for nonadvanced approaches institutions that
file the FFIEC 041 or FFIEC 051 Call
Report that elect to wait to adopt the
simplifications rule on April 1, 2020, on
how to complete Schedule RC–R,
including the capital calculation
column, for the March 31, 2020, report
date in accordance with the capital rule
in effect before the simplifications rule’s
revised effective date of January 1, 2020.
Beginning with the June 30, 2020, report
date, all non-advanced approaches
institutions that file the FFIEC 041 or
FFIEC 051 Call Report would complete
Schedule RC–R as revised for the
simplifications rule.
In connection with proposing that all
advanced approaches institutions file
the FFIEC 031 Call Report, the agencies
propose to remove certain items from
the FFIEC 041 Call Report that apply
only to advanced approaches
institutions. Thus, for Schedule RC–R,
Part I, in the FFIEC 041 Call Report, the
agencies propose to remove items 30.b,
32.b, 34.b, 35.b, 40.b, 41 through 43
(Column B only), 45.a, 45.b, and 46.b.
The agencies propose to renumber items
30.a, 32.a, 34.a, 35.a, 40.a, and 46.a as
items 30, 32, 34, 35, 40, and 46,
respectively. When the FFIEC 051 Call
Report was created in 2016 (and
implemented as of March 31, 2017),
Schedule RC–R, Part I, was revised to
remove the items and references
applicable only to advanced approaches
institutions. Thus, as a result, Schedule
RC–R, Part I, as it is proposed to be
revised in the FFIEC 041 would be the
same as the existing Schedule RC–R,
Part I, in the FFIEC 051.
In the simplifications rule, the
agencies increased the thresholds for
including MSAs, temporary difference
DTAs that could not be realized through
net operating loss carrybacks (temporary
difference DTAs),10 and investments in
the capital of unconsolidated financial
institutions for non-advanced
approaches institutions. In addition, the
agencies revised the capital calculation
for minority interests included in the
10 The agencies note that An Act to provide for
reconciliation pursuant to titles II and V of the
concurrent resolution on the budget for fiscal year
2018, Public Law 115–97 (originally introduced as
the Tax Cuts and Jobs Act), enacted December 22,
2017, eliminated the concept of net operating loss
carrybacks for U.S. federal income tax purposes,
although the concept may still exist in particular
jurisdictions for state or foreign income tax
purposes.
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various capital categories for nonadvanced approaches institutions and to
the calculation of the capital
conservation buffer.
The current regulatory capital
calculations in Call Report Schedule
RC–R, which do not yet reflect the
revisions contained in the
simplifications rule, require that an
institution’s capital cannot include
MSAs, certain temporary difference
DTAs, and significant investments in
the common stock of unconsolidated
financial institutions in an amount
greater than 10 percent of CET1 capital,
on an individual basis, and those three
data items combined cannot comprise
more than 15 percent of CET1 capital.
When the reporting of regulatory capital
calculations by non-advanced
approaches institutions in accordance
with the simplifications rule takes
effect, this calculation would be revised
in Schedule RC–R, Part I, to require that
only MSAs or temporary difference
DTAs in an amount greater than 25
percent of CET1 capital, on an
individual basis, could not be included
in a non-advanced approaches
institution’s capital. The 15 percent
aggregate limit would be removed. In
addition, the simplifications rule will
combine the current three categories of
investments in financial institutions
(non-significant investments in the
capital of unconsolidated financial
institutions, significant investments in
the capital of unconsolidated financial
institutions that are in the form of
common stock, and significant
investments in the capital of
unconsolidated financial institutions
that are not in the form of common
stock) into a single category,
investments in the capital of
unconsolidated financial institutions,
and will apply a limit of 25 percent of
CET1 capital on the amount of these
investments that can be included in
capital. Any investments in excess of
the 25 percent limit would be deducted
from capital using the corresponding
deduction approach.
Consistent with the current capital
rule, an institution must risk weight
MSAs, temporary difference DTAs, and
investments in the capital of
unconsolidated financial institutions
that are not deducted. The agencies
propose revisions to allow institutions
to enter values into the Column K—
250% risk weight on Schedule RC–R,
Part II, in the FFIEC 051 Call Report,
which is currently shaded out, and
remove footnote two on the second page
of Schedule RC–R, Part II, and the
corresponding footnote on subsequent
pages of Schedule RC–R, Part II, in all
three versions of the Call Reports
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effective as of the March 31, 2020,
report date to accommodate the
simplifications rule revisions to the risk
weight for MSAs and temporary
difference DTAs. Consistent with the
simplifications rule, non-advanced
approaches institutions will not be
required to differentiate among
categories of investments in the capital
of unconsolidated financial institutions.
The risk weight for such equity
exposures generally will be 100 percent,
provided the exposures qualify for this
risk weight.11 For non-advanced
approaches institutions, the
simplifications rule eliminates the
exclusion of significant investments in
the capital of unconsolidated financial
institutions in the form of common
stock from being eligible for a 100
percent risk weight.12 The application of
the 100 percent risk weight (i) requires
a banking organization to follow an
enumerated process for calculating
adjusted carrying value and (ii)
mandates the equity exposures that
must be included in determining
whether the threshold has been reached.
Equity exposures that do not qualify for
a preferential risk weight will generally
receive risk weights of either 300
percent or 400 percent, depending on
whether the equity exposures are
publicly traded.
In order to implement these
regulatory capital changes from a
regulatory reporting perspective, the
agencies propose to make a number of
revisions to Schedule RC–R, Part I, for
non-advanced approaches institutions
effective March 31, 2020. Specifically,
in Schedule RC–R, Part I, in the FFIEC
041 and FFIEC 051 Call Reports, the
agencies propose to remove item 11 and
modify item 13 to reflect the
consolidation of all investments in
unconsolidated financial institutions
into a single category and apply a single
25 percent of CET1 capital limit to these
investments. The agencies propose to
modify items 14 and 15 to reflect the 25
percent of CET1 capital limit for MSAs
and certain temporary difference DTAs,
respectively. The agencies also propose
to remove item 16, which applies to the
aggregate 15 percent limitation that was
removed from the capital rule for nonadvanced approaches institutions. In the
FFIEC 031 Call Report, the agencies
propose to create two columns for
existing items 11 through 19. Column A
would be reported by non-advanced
approaches institutions that elect to
adopt the simplifications rule on
January 1, 2020, in the March 2020 Call
Report and by all non-advanced
approaches institutions beginning in the
June 2020 Call Report using the
definitions under the simplifications
rule. Column A would not include items
11 or 16, and items 13 through 15 would
be designated as items 13.a through 15.a
to reflect the new calculation
methodology. Column B would be
reported by advanced approaches
institutions and by non-advanced
approaches institutions that elect to
wait to adopt the simplifications rule on
April 1,2020, in the March 2020 Call
Report and only by advanced
approaches institutions beginning in the
June 2020 Call Report using the existing
definitions. Existing items 13 through
15 would be designated as items 13.b
through 15.b to reflect continued use of
the existing calculation methodology.
The agencies are not proposing any
changes to the form to incorporate the
minority interest revisions. However,
the agencies are proposing to modify the
instructions for the existing minority
interest items in all versions of the Call
Report to reflect the ability of nonadvanced approaches institutions to use
the revised method under the
simplifications rule to calculate
minority interest in existing items 4, 22,
and 29 (CET1, additional tier 1, and tier
2 minority interest, respectively).
B. Community Bank Leverage Ratio Rule
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11 12
CFR 3.52 and .53 (OCC); 12 CFR 217.52 and
.53 (Board); 12 CFR 324.52 and .53 (FDIC). Note that
for purposes of calculating the 10 percent
nonsignificant equity bucket, the capital rule
excludes equity exposures that are assigned a risk
weight of zero percent and 20 percent, and
community development equity exposures and the
effective portion of hedge pairs, both of which are
assigned a 100 percent risk weight. In addition, the
10 percent non-significant bucket excludes equity
exposures to an investment firm that would not
meet the definition of traditional securitization
were it not for the application of criterion 8 of the
definition of traditional securitization, and has
greater than immaterial leverage.
12 Equity exposures that exceed, in the aggregate,
10 percent of a non-advanced approaches banking
organization’s total capital would then be assigned
a risk weight based upon the approaches available
in sections 52 and 53 of the capital rule. 12 CFR
3.52 and .53 (OCC); 12 CFR 217.52 and .53 (Board);
12 CFR 324.52 and .53 (FDIC).
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1. Background
In February 2019, the agencies
proposed a rule to provide a simplified
alternative measure of capital adequacy,
the community bank leverage ratio
(CBLR), for qualifying community
banking organizations with less than
$10 billion in total consolidated assets
(CBLR proposed rule),13 consistent with
section 201 of the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA).14 In
February 2019, the FDIC published a
proposed rule to amend the deposit
13 84
FR 3062 (February 8, 2019).
Law 115–174, 132 Stat. 1296 (2018).
14 Public
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insurance assessment regulations to
incorporate the community bank
leverage ratio framework (CBLR
framework) into the deposit insurance
assessment system (CBLR assessments
proposed rule).15 The agencies then
requested comment in April 2019 on
proposed revisions to the Call Report to
implement the CBLR proposed rule and
the CBLR assessments proposed rule.16
However, the FDIC and the OCC have
recently approved,17 and the Board is
considering, a final rule (planned CBLR
final rule) that contains significant
revisions to the calculation
methodology relative to the CBLR
proposed rule. Therefore, the agencies
are proposing a revised version of
community bank leverage ratio
reporting in the Call Report to reflect the
changes in the planned CBLR final rule,
which replaces the previously proposed
community bank leverage ratio
reporting that had been designed to
implement the CBLR proposed rule. In
addition, the FDIC has recently
approved a final rule regarding the
application of the CBLR framework to
the deposit insurance assessment
system (CBLR assessments final rule).18
Because of the features of the revised
calculation methodology in the planned
CBLR final rule described below, the
agencies are not proceeding with the
previously proposed revisions to Call
Report Schedule RC–O, ‘‘Other Data for
Deposit Insurance Assessments,’’ to
implement the CBLR assessments
proposed rule 19 and no revisions to
Schedule RC–O are being proposed in
connection with the CBLR assessments
final rule. Certain clarifications would
be made to the Schedule RC–O
instructions to address the application
of the CBLR framework to the FDIC’s
deposit insurance assessment system in
accordance with the CBLR assessments
final rule.
Under the planned CBLR final rule,
banking organizations that have less
than $10 billion in total consolidated
assets, meet risk-based qualifying
criteria, and have a leverage ratio of
greater than 9 percent will be eligible to
opt into the CBLR framework. A
banking organization that opts into the
CBLR framework, maintains a leverage
ratio of greater than 9 percent, and
meets the other qualifying criteria will
not be subject to other risk-based and
leverage capital requirements and, in
the case of an insured depository
15 84
FR 5380 (February 21, 2019).
FR 16560 (April 19, 2019).
FDIC Press Release 80–2019, dated
September 17, 2019.
18 See FDIC Press Release 80–2019, dated
September 17, 2019.
19 See 84 FR 16565–16566 (April 19, 2019).
16 84
17 See
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institution (IDI), would be considered to
have met the well capitalized capital
ratio requirements for purposes of the
agencies’ prompt corrective action
framework.
Under the planned CBLR final rule, a
bank or savings association (bank) that
opts into the CBLR framework (CBLR
bank) may opt out of the CBLR
framework at any time, without
restriction, by reverting to the generally
applicable capital requirements in the
agencies’ capital rule 20 and reporting its
regulatory capital information in Call
Report Schedule RC–R, ‘‘Regulatory
Capital,’’ Parts I and II, at the time of
opting out.
As described in the planned CBLR
final rule, a banking organization that
no longer meets the qualifying criteria
for the CBLR framework will be
required within two consecutive
calendar quarters (grace period) either to
once again satisfy the qualifying criteria
or demonstrate compliance with the
generally applicable capital
requirements. During the grace period,
the bank would continue to be treated
as a CBLR bank and would be required
to report its leverage ratio and related
components in Call Report Schedule
RC–R, Part I, in the manner described in
this notice.21 A CBLR bank that ceases
to meet the qualifying criteria as a result
of a business combination (e.g., a
merger) would receive no grace period,
and would immediately become subject
to the generally applicable capital
requirements. Similarly, a CBLR bank
that fails to maintain a leverage ratio
greater than 8 percent would not be
permitted to use the grace period and
would immediately become subject to
the generally applicable capital
requirements.
2. Proposed Revisions to Call Report
Schedule RC–R
In this notice, the agencies are
proposing reporting revisions to the Call
Reports for banks that qualify for and
opt into the CBLR framework, consistent
with the planned CBLR final rule. The
reporting changes to the Call Reports
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20 12
CFR part 3 (OCC); 12 CFR part 217 (Board);
12 CFR part 324 (FDIC).
21 For example, if the electing banking
organization no longer meets one of the qualifying
criteria as of February 15, and still does not meet
the criteria as of the end of that quarter, the grace
period for such a banking organization will begin
as of the end of the quarter ending March 31. The
banking organization may continue to use the
community bank leverage ratio framework as of
June 30, but will need to comply fully with the
generally applicable rule (including the associated
reporting requirements) as of September 30, unless
the banking organization once again meets all
qualifying criteria of the community bank leverage
ratio framework, including a leverage ratio of
greater than 9 percent, by that date.
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proposed in this notice would take
effect in the same quarter as the
effective date of the planned final rule
adopting the CBLR framework.
The agencies originally proposed to
incorporate all the community bank
leverage ratio items into a separate
version of Schedule RC–R. However,
after considering the substantial changes
made in the planned CBLR final rule,
the agencies now propose to incorporate
all the revisions related to the
community bank leverage ratio into the
existing Schedule RC–R, Part I, for all
versions of the Call Report.
As provided in the planned CBLR
final rule, the numerator of the
community bank leverage ratio will be
tier 1 capital, which is currently
reported in Schedule RC–R, Part I, item
26. Therefore, the agencies are not
proposing any changes related to the
numerator of the community bank
leverage ratio.
As provided in the planned CBLR
final rule, the denominator of the
community bank leverage ratio will be
average total consolidated assets.
Specifically, average total consolidated
assets would be calculated in
accordance with the existing reporting
instructions for Schedule RC–R, Part I,
items 36 through 39. The agencies are
not proposing any substantive changes
related to the denominator of the
community bank leverage ratio.
However, the agencies are proposing to
move existing items 36 through 39 of
Schedule RC–R, Part I, and renumber
them as items 27 through 30 of
Schedule RC–R, Part I, to consolidate all
of the community-bank-leverage-ratiorelated capital items earlier in Schedule
RC–R, Part I.
As provided in the planned CBLR
final rule, a CBLR bank will calculate its
community bank leverage ratio by
dividing tier 1 capital by average total
consolidated assets (as adjusted), and
the community bank leverage ratio
would be reported as a percentage,
rounded to four decimal places. Since
this calculation is essentially identical
to the existing calculation of the tier 1
leverage ratio in Schedule RC–R, Part I,
item 44, the agencies are not proposing
a separate item for the community bank
leverage ratio in Schedule RC–R, Part I.
Instead, the agencies propose to move
the tier 1 leverage ratio from item 44 of
Part I and renumber it as item 31, and
rename the item the Leverage Ratio, as
this ratio would apply to all institutions
(as the community bank leverage ratio
for qualifying institutions or the tier 1
leverage ratio for all other institutions).
As provided in the planned CBLR
final rule, a CBLR bank will need to
satisfy certain qualifying criteria in
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order to be eligible to opt into the CBLR
framework. The proposed items
identified below would collect
information necessary to ensure that a
bank continuously meets the qualifying
criteria for using the CBLR framework.
Specifically, a CBLR bank is a bank
that is not an advanced approaches
institution and meets the following
qualifying criteria:
• A leverage ratio of greater than 9
percent;
• Total consolidated assets of less
than $10 billion;
• Total trading assets and trading
liabilities of 5 percent or less of total
consolidated assets; and
• Total off-balance sheet exposures
(excluding derivatives other than sold
credit derivatives and unconditionally
cancelable commitments) of 25 percent
or less of total consolidated assets.22
Accordingly, the agencies propose
collecting the items described below for
community bank leverage ratio
reporting purposes.
In proposed item 32 of Schedule RC–
R, Part I, a CBLR bank would report
total assets, as reported in Call Report
Schedule RC, item 12.
In proposed item 33, a CBLR bank
would report the sum of trading assets
from Schedule RC, item 5, and trading
liabilities from Schedule RC, item 15, in
Column A. The bank would also report
that sum divided by total assets from
Schedule RC, item 12, and expressed as
a percentage in Column B. As provided
in the planned CBLR final rule, trading
assets and trading liabilities would be
added together, not netted, for purposes
of this calculation. Also as discussed in
the planned CBLR final rule, a bank
would not meet the definition of a
qualifying community banking
organization for purposes of the CBLR
framework if the percentage reported in
Column B is greater than 5 percent.
In proposed items 34.a through 34.d,
a CBLR bank would report information
related to commitments, other offbalance sheet exposures, and sold credit
derivatives.
22 Under the planned CBLR final rule, the
agencies have reserved the authority to disallow the
use of the CBLR framework by a depository
institution or depository institution holding
company based on the risk profile of the banking
organization. This authority is reserved under the
general reservation of authority included in the
capital rule, in which the CBLR framework would
be codified. See 12 CFR 3.1(d) (OCC); 12 CFR
217.1(d) (Board); 12 CFR 324.1(d) (FDIC). In
addition, for purposes of the capital rule and
section 201 of the EGRRCPA, the agencies have
reserved the authority to take action under other
provisions of law, including action to address
unsafe or unsound practices or conditions, deficient
capital levels, or violations of law or regulation. See
12 CFR 3.1(b) (OCC); 12 CFR 217.1(b) (Board); 12
CFR 324.1(b) (FDIC).
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In proposed item 34.a, a CBLR bank
would report the unused portion of
conditionally cancelable commitments.
This amount would be the amount of all
unused commitments less the amount of
unconditionally cancelable
commitments, as discussed in the
planned CBLR final rule and defined in
the agencies’ capital rule.23 This item
would be calculated consistent with the
sum of Schedule RC–R, Part II, items
18.a and 18.b, Column A.
In proposed item 34.b, a CBLR bank
would report total securities lent and
borrowed, which would be the sum of
Schedule RC–L, items 6.a and 6.b.
In proposed item 34.c, a CBLR bank
would report the sum of certain other
off-balance sheet exposures and sold
credit derivatives. Specifically, a CBLR
bank would report the sum of selfliquidating, trade-related contingent
items that arise from the movement of
goods; transaction-related contingent
items (performance bonds, bid bonds,
warranties, and performance standby
letters of credit); sold credit protection
in the form of guarantees and credit
derivatives; credit-enhancing
representations and warranties;
financial standby letters of credit;
forward agreements that are not
derivative contracts; and off-balance
sheet securitizations. A CBLR bank
would not include derivatives that are
not sold credit derivatives, such as
foreign exchange swaps and interest rate
swaps, in proposed item 34.c.
In proposed item 34.d, a CBLR bank
would report the sum of proposed items
34.a through 34.c in Column A. The
bank would also report that sum
divided by total assets from Schedule
RC, item 12, and expressed as a
percentage in Column B. As discussed
in the planned CBLR final rule, a bank
would not be eligible to opt into the
CBLR framework if this percentage is
greater than 25 percent.
In proposed item 35, a CBLR bank
would report the total of
unconditionally cancellable
commitments, which would be
calculated consistent with the
instructions for existing Schedule RC–R,
Part II, item 19. This item is not used
specifically to calculate a bank’s
eligibility for the CBLR framework.
However, the agencies are collecting
this information to identify any bank
using the CBLR framework that may
have significant or excessive
concentrations in unconditionally
cancellable commitments that would
warrant the agencies’ use of the
23 See
definition of ‘‘unconditionally cancellable’’
in 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR
324.2 (FDIC).
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reservation of authority in their capital
rule to direct an otherwise-eligible
CBLR bank to report its regulatory
capital using the generally applicable
capital requirements.24
In proposed item 36, a CBLR bank
would report the amount of investments
in the capital instruments of an
unconsolidated financial institution that
would qualify as tier 2 capital. Since the
CBLR framework does not have a total
capital requirement, a CBLR bank is
neither required to calculate tier 2
capital nor make any deductions that
would be taken from tier 2 capital.
Therefore, if a CBLR bank has
investments in the capital instruments
of an unconsolidated financial
institution that would qualify as tier 2
capital of the CBLR bank under the
generally applicable capital
requirements (tier 2 qualifying
instruments), and the CBLR bank’s total
investments in the capital of
unconsolidated financial institutions
exceed 25 percent of its CET1 capital,
the CBLR bank is not required to deduct
the tier 2 qualifying instruments. A
CBLR bank is required to make a
deduction from CET1 capital or tier 1
capital only if the sum of its
investments in the capital of an
unconsolidated financial institution is
in a form that would qualify as CET1
capital or tier 1 capital instruments of
the CBLR bank and the sum exceeds the
25 percent CET1 threshold. The
agencies believe it is important to
continue collecting information on the
amount of investments in these capital
instruments as excessive investments
similarly could warrant the agencies’
use of their reservation of authority.
In proposed item 37, a CBLR bank
would be required to report its allocated
transfer risk reserve (ATRR), as
currently calculated and reported in
Schedule RC–R, Part II, item 30. In
proposed items 38.a through 38.c, a
CBLR bank that has adopted Accounting
Standards Update (ASU) No. 2016–13
on credit losses must report the amount
of any allowances for credit losses on
purchased credit-deteriorated loans and
leases held for investment, held-tomaturity debt securities, and other
financial assets measured at amortized
cost, as currently calculated and
reported in Schedule RC–R, Part II,
Memorandum items 4.a through 4.c.
The amount of the ATRR, if any, is
necessary to calculate capital and
surplus and corresponding limits in a
number of the OCC’s regulations,
24 Other factors also may lead the agencies to
determine that the risk profile of an otherwiseeligible CBLR bank would warrant the use of the
reservation of authority.
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including investment securities limits
(12 CFR part 1) and lending limits (12
CFR part 32). After an institution adopts
ASU 2016–13, allowances for credit
losses on purchased credit-deteriorated
assets similarly would affect the
calculation of these limits. While these
limits apply directly to institutions
supervised by the OCC, a number of
federal or state laws may apply the
OCC’s calculation of certain limits to
state-chartered institutions supervised
by the FDIC or the Board. Therefore, the
agencies are proposing to retain this
information for all CBLR banks. As
CBLR banks would not complete
Schedule RC–R, Part II, this information
would otherwise not be readily
available for the agencies to calculate
the relevant regulatory limits for these
institutions.25
Because a CBLR bank would not be
subject to the generally applicable
capital requirements, a CBLR bank
would not need to complete any of the
items in Schedule RC–R, Part I, after
proposed item 38, nor would the bank
need to complete Schedule RC–R, Part
II, Risk-Weighted Assets.
In connection with moving the
leverage ratio calculations and inserting
items for the CBLR qualifying criteria in
Schedule RC–R, Part I, existing items 27
through 35 of Schedule RC–R, Part I,
will be renumbered as items 39 through
47. Existing items 40 through 43 will be
renumbered as items 48 through 51,
while existing items 46 through 48 will
be renumbered as items 52 through 54.
For advanced approaches institutions
filing the FFIEC 031 Call Report,
existing items 45.a and 45.b for total
leverage exposure and the
supplementary leverage ratio,
respectively, will be renumbered as
items 55.a and 55.b.
A CBLR bank would indicate that it
has elected to apply the CBLR
framework by completing Schedule RC–
R, Part I, items 32 through 38.
Institutions not subject to the CBLR
framework would be required to report
all data items in Schedule RC–R, Part I,
except for items 32 through 38.
3. Other Proposed Call Report Revisions
Related to the CBLR
While not specifically part of the
planned CBLR final rule, the agencies
currently collect information in Call
Report Schedule RC–C, Part I, ‘‘Loans
25 Institutions that are not CBLR banks would not
complete proposed items 37 and 38.a through 38.c,
but would continue to report any ATRR and any
allowances for credit losses on purchased creditdeteriorated loans and leases held for investment,
held-to-maturity debt securities, and other financial
assets measured at amortized cost in Schedule RC–
R, Part II.
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and Leases,’’ Memorandum item 13,
from institutions that have a significant
amount of construction, land
development, and other land loans with
interest reserves in relation to their total
regulatory capital as reported as of the
previous calendar year-end report date.
At present, total regulatory capital is
defined as total capital reported on
Schedule RC–R, Part I, item 35 (FFIEC
051) or item 35.a (FFIEC 031 or FFIEC
041). While CBLR banks would no
longer report their total capital in
Schedule RC–R, Part I, the agencies
believe it is still important to collect this
information from CBLR banks that have
a significant amount of construction,
land development, and other land loans
with interest reserves. Therefore,
effective March 31, 2021,26 the agencies
propose to revise the reporting
threshold for Schedule RC–C, Part I,
Memorandum item 13, for all
institutions to reference the sum of tier
1 capital as reported in Schedule RC–R,
Part I, item 26, plus the allowance for
loan and lease losses or the allowance
for credit losses on loan and leases, as
applicable, as reported in Schedule RC,
item 4.c.
C. Proposed Tailoring Rules
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1. Background
On December 21, 2018, the agencies
published a notice of proposed
rulemaking (NPR) proposing to revise
the criteria for determining the
applicability of requirements under the
regulatory capital rule, the liquidity
coverage ratio rule, and the proposed
net stable funding ratio rule for large
U.S. banking organizations (domestic
interagency tailoring NPR).27 The
proposal would establish four risk-based
categories and apply tailored capital and
liquidity requirements for banking
organizations subject to each category.
On May 24, 2019, the agencies
published an NPR that would revise the
criteria for determining the applicable
regulatory capital requirements for
certain U.S. intermediate holding
companies of foreign banking
organizations and their depository
institution subsidiaries, and the
application of standardized liquidity
26 For report dates during 2020, the reporting
threshold for Schedule RC–C, Part I, Memorandum
item 13, would be the total capital an institution
reported in Schedule RC–R, Part I, as of December
31, 2019, which will predate the initial reporting
under the CBLR framework in Schedule RC–R. The
first year-end report date under the CBLR
framework would be December 31, 2020, which
would be the report date to which a CBLR bank
would refer in order to determine whether it would
need to complete Schedule RC–C, Part I,
Memorandum item 13, as of each quarter-end report
date during 2021.
27 83 FR 66024 (December 21, 2018).
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requirements with respect to the U.S.
operations of large foreign banking
organizations and certain of their
depository institution subsidiaries, each
according to three of the four risk-based
categories proposed for U.S. banking
organizations (foreign interagency
tailoring NPR).28 Thus, the proposal is
similar to the domestic interagency
tailoring NPR. The foreign interagency
tailoring NPR also proposed technical
amendments to certain provisions of the
domestic interagency tailoring NPR.
Under the proposed approach, the
most stringent set of standards (Category
I) would apply to U.S. global
systemically important banks (GSIBs).
The second set of standards (Category II)
would apply to banking organizations
that are very large or have significant
international activity. Like Category I,
this category would generally include
standards that are based on standards
that reflect agreements reached by the
Basel Committee on Banking
Supervision. The third set of standards
(Category III) would apply to banking
organizations with $250 billion or more
in total consolidated assets that do not
meet the criteria for Category I or II. The
third set of standards would also apply
to banking organizations with total
consolidated assets of $100 billion or
more, but less than $250 billion, that
meet or exceed other specified riskbased indicators. The fourth set of
standards (Category IV) would apply to
banking organizations with total
consolidated assets of $100 billion or
more that do not meet the thresholds for
one of the other categories.
The domestic interagency tailoring
and foreign interagency tailoring NPRs
also describe the capital and liquidity
requirements that would apply for
institutions subject to Category I, II, III,
or IV capital standards. Based on the
proposed capital and liquidity
requirements that would apply to
institutions subject to Category I, II, III,
or IV capital standards in the domestic
interagency tailoring and foreign
interagency tailoring NPRs, the agencies
are proposing to amend certain
regulatory report forms to clarify the
reporting requirements for those
institutions that would be subject to
those proposed rules. Specifically, the
agencies are proposing changes to Call
Report Schedule RC–R, Part I,
Regulatory Capital Components and
Ratios, and FFIEC 101 Schedule A,
Advanced Approaches Regulatory
Capital, to provide clarification for
institutions subject to Category III
28 84
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capital standards.29 If modifications are
made to the proposed tailoring rules
when the rules are adopted in final
form, the agencies would modify the
Call Report and FFIEC 101 proposals to
incorporate such changes. These
changes would generally align with the
Board’s proposed amendments to FR Y–
9C, Schedule HC–R, Part I, issued in
conjunction with the Board’s domestic
tailoring and foreign tailoring
proposals.30
In addition, the agencies are
proposing that all institutions subject to
Category I, II, or III capital standards
would be required to file the FFIEC 031
Call Report. While the agencies
proposed to require all advanced
approaches institutions to file the FFIEC
031 Call Report in connection with the
simplifications rule, the tailoring rules
would narrow the scope of institutions
calculating risk-weighted assets under
the advanced approaches. The agencies
expect this scope revision to have little,
if any, impact on current institutions, as
all institutions with total consolidated
assets of $100 billion or more or with
foreign offices already are required to
file the FFIEC 031, which generally
aligns with the standards for Category I,
II, and III institutions.31 Also, modifying
the scope of the Call Report in this
manner would enable the agencies to
streamline Schedule RC–R, Part I, of the
FFIEC 041 report by removing data
items that apply only to the limited
number of current advanced approaches
institutions currently eligible to file the
FFIEC 041 report and to any future
institutions that would, absent this
change in scope, be eligible to file the
FFIEC 041 report.
2. Proposed Revisions to Call Report
Schedule RC–R, Part I
In order to implement the
clarifications for institutions subject to
Category III capital standards, as
discussed above the agencies propose to
require all Category III institutions to
file the FFIEC 031 Call Report and to
revise the caption for Schedule RC–R,
Part I, item 45, ‘‘Advanced approaches
institutions only: Supplementary
leverage ratio information,’’ on the
FFIEC 031 Call Report. Specifically, the
29 The agencies do not believe reporting form or
instructional clarifications are needed to reflect
capital requirements that would apply to
institutions subject to Category I, II, or IV capital
standards under the domestic interagency tailoring
and foreign interagency tailoring NPRs.
30 See 84 FR 22009 (May 15, 2019).
31 Institutions that are subsidiaries of institutions
subject to Category I, II, or III capital standards also
are considered Category I, II, or III institutions
under the domestic interagency tailoring and
foreign interagency tailoring NPRs, and would be
treated similarly for this change in reporting scope.
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agencies propose to clarify that item 45
(proposed to be renumbered as item 55)
applies to ‘‘advanced approaches and
Category III institutions’’ on the FFIEC
031 report form. Item 45 would be
removed from the FFIEC 041 report
form. The instructions for Schedule RC–
R, Part I, item 45 (proposed to be
renumbered as item 55), in the FFIEC
031–FFIEC 041 instruction book also
would be revised in the same manner.
The general instructions for Schedule
RC–R, Part I, in the FFIEC 031–FFIEC
041 instruction book also would be
clarified to indicate that Category III
institutions are not required to calculate
risk-weighted assets according to the
advanced approaches rule, but are
subject to the supplementary leverage
ratio and countercyclical capital buffer.
3. Proposed Revisions to the FFIEC 101
To implement the clarification for
institutions subject to Category III
capital standards, the agencies propose
to revise the instructions for the scope
of the FFIEC 101. Specifically, the
instructions would be revised to clarify
that top-tier Category III bank holding
companies, savings and loan holding
companies, and insured depository
institutions, and all U.S. intermediate
holding companies, must complete
FFIEC 101 Schedule A, SLR Tables 1
and 2, only.32 All Category IV
institutions would not complete or file
any part of the FFIEC 101.
D. Proposed Total Loss Absorbing
Capacity Holdings Rule
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1. Background
On April 8, 2019, the agencies
published an NPR that would address
an advanced approaches banking
organization’s regulatory capital
treatment of an investment in unsecured
debt instruments issued by foreign or
U.S. global systemically important
banks (GSIBs) for the purposes of
meeting minimum total loss absorbing
capacity (TLAC) and, where applicable,
long-term debt (LTD) requirements, or
liabilities issued by GSIBs that are pari
passu or subordinated to such debt
instruments (TLAC Holdings NPR).33
Under the TLAC Holdings NPR,
investments by an advanced approaches
banking organization in certain
unsecured debt instruments generally
would be subject to deduction from the
32 Any Category III banking organization that is a
consolidated subsidiary of a top-tier Category III
bank holding company, savings and loan holding
company, or insured depository institution would
not complete or file any part of the FFIEC 101.
Those subsidiary banking organizations would
report SLR data on Schedule RC–R of the Call
Report.
33 84 FR 13814 (April 8, 2019).
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advanced approaches banking
organization’s regulatory capital if such
investments exceed certain thresholds.
The Board also proposed to require that
banking organizations subject to
minimum TLAC and LTD requirements
under Board regulations publicly
disclose their TLAC and LTD issuances
in a manner described in the TLAC
Holdings NPR.
The agencies are proposing changes to
Call Report Schedule RC–R, Part I,
Regulatory Capital Components and
Ratios, and FFIEC 101 Schedule A,
Advanced Approaches Regulatory
Capital, to implement the changes
proposed to the agencies’ capital rule. If
modifications are made to the proposed
TLAC holdings rule when it is adopted
in final form, the agencies would
modify the Call Report and FFIEC 101
proposals to incorporate such changes.
2. Proposed Revisions to Call Report
Schedule RC–R, Part I
Under the TLAC Holdings NPR,
advanced approaches banking
organizations would report the total
amount of deductions related to
investments in own CET1, additional
tier 1, and tier 2 capital instruments;
investments in own covered debt
instruments, if applicable; reciprocal
cross holdings; non-significant
investments in the capital and covered
debt instruments of unconsolidated
financial institutions that exceed certain
thresholds; certain investments in
excluded covered debt instruments, as
applicable; and significant investments
in the capital and covered debt
instruments of unconsolidated financial
institutions. Any deductions related to
covered debt instruments and excluded
covered debt instruments (together,
TLAC debt holdings) would be applied
at the level of tier 2 capital under the
agencies’ existing regulatory capital
rule. Any required deduction would be
made using the ‘‘corresponding
deduction approach,’’ by which an
advanced approaches banking
organization would deduct TLAC debt
holdings first from tier 2 capital and, if
it had insufficient tier 2 capital to make
the full requisite deduction, deduct the
remaining amount from additional tier 1
capital and then, if necessary, from
CET1 capital.
In order to implement these proposed
changes, the agencies propose to make
a number of revisions to the instructions
for Schedule RC–R, Part I, that would be
applicable to advanced approaches
banking organizations and would be
included in the FFIEC 031–FFIEC 041
instruction book. Specifically, the
agencies propose to revise the
instructions for items 11, 17, 24, and 33
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(proposed to be renumbered as item 45)
to effectuate the deductions from
regulatory capital for advanced
approaches banking organizations
related to investments in covered debt
instruments and excluded covered debt
instruments. These changes would
generally align with the Board’s
proposed amendments to FR Y–9C,
Schedule HC–R, Part I, issued in
conjunction with the TLAC Holdings
NPR.34
3. Proposed Revisions to Call Report
Schedule RC–R, Part II
The agencies also are proposing to
revise the instructions for Schedule RC–
R, Part II, that would be applicable to
advanced approaches banking
organizations and would be included in
the FFIEC 031–FFIEC 041 instruction
book. Specifically, the agencies propose
to revise the instructions for items 2.a,
2.b, 7, and 8 to incorporate investments
in covered debt instruments and
excluded debt instruments, as
applicable, by advanced approaches
banking organizations in their
calculation of risk-weighted assets.
These changes would generally align
with the Board’s proposed amendments
to FR Y–9C, Schedule HC–R, Part II,
issued in conjunction with the TLAC
Holdings NPR.
4. Proposed Revisions to FFIEC 101
Schedule A
i. Deductions From Regulatory Capital
The agencies propose to make a
number of revisions to the instructions
for FFIEC 101 Schedule A and add a
new data item to this schedule.
Specifically, the agencies propose to
revise the instructions for existing items
52 through 54 and add a new data item
to effectuate any deductions from
regulatory capital for advanced
approaches banking organizations for
investments in excluded covered debt
instruments, as described in Section
II.D.2. above. Existing item 56, ‘‘Other
deductions from tier 2 capital,’’ would
be renumbered and recaptioned as item
56.b, ‘‘All other deductions from tier 2
capital.’’ The new item would be
inserted as item 56.a, ‘‘Investments in
excluded covered debt instruments,’’
which would be applicable only to
global systemically important bank
holding companies (GSIBs) and
subsidiaries of GSIBs.
ii. LTD and TLAC Amounts, Ratios, and
Buffer
In conjunction with the issuance of
the TLAC Holdings NPR, the Board also
proposed revisions to the FR Y–9C,
34 See
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Schedule HC–R, Part I, that would
collect information from U.S. GSIBs and
the intermediate holding companies of
foreign GSIBs. Specifically, the
proposed items would collect
information on these holding
companies’ LTD and TLAC amounts,
LTD and TLAC ratios, and TLAC buffer.
Since the minimum LTD and TLAC
requirements and TLAC buffer are only
applied at the holding company-level,
the agencies are not proposing to amend
the FFIEC 101 to include this
information. Collecting this information
in the FFIEC 101 would be a duplicative
reporting requirement and would only
be applicable to a subset of FFIEC 101
filers. However, the agencies are
interested in public feedback on this
issue, especially if commenters believe
including these items would enhance or
simplify public disclosure.
E. Proposed Revisions to the
Supplementary Leverage Ratio for
Certain Central Bank Deposits of
Custodial Banks
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1. Background
On April 30, 2019, the agencies
published an NPR that would
implement section 402 of the EGRRCPA
(section 402). Section 402 directs the
agencies to amend the capital rule 35 to
exclude from the SLR certain central
bank deposits of custodial banks.
Section 402 defines a custodial bank as
any depository institution holding
company predominantly engaged in
custody, safekeeping, and asset
servicing activities, including any IDI
subsidiary of such a holding company.36
Under the proposed rulemaking, a
depository institution holding company
would be considered predominantly
engaged in custody, safekeeping, and
asset servicing activities if the U.S. toptier depository institution holding
company in the organization has a ratio
of assets under custody-to-total assets of
at least 30:1. The proposal would define
such a depository institution holding
company, together with any subsidiary
depository institution, as a ‘‘custodial
banking organization.’’ 37 Under the
proposal, a custodial banking
35 See 12 CFR part 3 (OCC); 12 CFR part 217
(Board); 12 CFR part 324 (FDIC).
36 See generally Public Law 115–174, sec. 402.
37 For purposes of this proposed rulemaking, the
OCC’s capital rule would be revised to include a
definition of ‘‘custody bank,’’ defined as a national
bank or Federal savings association that is a
subsidiary of a depository institution holding
company that is a custodial banking organization
under 12 CFR 217.2. Similarly, the FDIC’s capital
rule would be revised to include a definition of
‘‘custody bank,’’ defined as an FDIC-supervised
institution that is a subsidiary of a depository
institution holding company that is a custodial
banking organization under 12 CFR 217.2.
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organization would exclude deposits
placed at a ‘‘qualifying central bank’’
from the denominator of the SLR. For
purposes of the proposal, a qualifying
central bank would mean a Federal
Reserve Bank, the European Central
Bank, or a central bank of a member
country of the Organisation for
Economic Co-operation and
Development (OECD) 38 if the country’s
sovereign exposures qualify for a zero
percent risk weight under section 32 of
the capital rule and the sovereign debt
of such member country is not in
default or has not been in default during
the previous five years. The amount of
central bank deposits that could be
excluded from the denominator of the
SLR would be limited by the amount of
deposit liabilities on the consolidated
balance sheet of the custodial banking
organization that are linked to fiduciary
or custody and safekeeping accounts.
The agencies are proposing changes to
the instructions for Call Report
Schedule RC–R and FFIEC 101
Schedule A, that would implement the
proposed changes to the agencies’
capital rule.39 If modifications are made
to the proposed custodial bank rule
when it is adopted in final form, the
agencies would modify the Call Report
and FFIEC 101 proposals to incorporate
such changes.
2. Proposed Revisions to Call Report
Schedule RC–R, Part I
As described in Section II.E.1. above,
revisions have been proposed to the
calculation of the total leverage
exposure, which is the denominator of
the SLR. Currently, the instructions for
Schedule RC–R, Part I, item 45.a, ‘‘Total
leverage exposure,’’ reference section
10(c)(4) of the agencies’ capital rule.
However, the proposed revisions to
implement section 402 would allow an
organization that qualifies as a
‘‘custodial banking organization’’ to
exclude deposits placed at a ‘‘qualifying
central bank’’ from the total leverage
exposure, limited to the amount of
deposit liabilities on the consolidated
balance sheet of the custodial banking
organization that are linked to fiduciary
or custody and safekeeping accounts.
Therefore, if the rule is implemented as
proposed, the capital rule would be
modified through the incorporation of
section 402. Accordingly, the agencies
38 The OECD is an intergovernmental
organization founded in 1961 to stimulate economic
progress and global trade. A list of OECD member
countries is available on the OECD’s website,
www.oecd.org.
39 In connection with the NPR to implement
section 402 of the EGRRCPA, the Board will
separately propose to make corresponding revisions
to the Consolidated Financial Statements for
Holding Companies (FR Y–9C).
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53237
would make corresponding
modifications to the instructions for the
calculation of the total leverage
exposure for institutions that qualify as
a ‘‘custodial banking organization’’ and
the reporting of this exposure in
Schedule RC–R, Part I, item 45.a (which
would become item 54.a, as proposed
above).
3. Proposed Revisions to FFIEC 101
Schedule A
Similar to its effect on the Call Report,
the agencies’ proposal to implement
section 402, as discussed in section
II.E.1. above, would also revise the total
leverage exposure calculation that
would be reported on the FFIEC 101
Schedule A. Currently, there are two
calculations for the total leverage
exposure in Schedule A, one is
contained in SLR Table 1 and the other
is in SLR Table 2. The agencies invite
comment on the addition of a new data
item to both tables in FFIEC 101
Schedule A for the qualifying central
bank deduction. The new reporting item
would be placed between existing data
items 1.7 and 1.8 in SLR Table 1, with
the instructions for the total leverage
exposure expected to include the new
reporting item in the total calculation.
Similarly, for SLR Table 2, the new
reporting item would be placed between
data items 2.2 and 2.3 and the total
leverage exposure would be modified to
include the new reporting item in the
total calculation.
F. Proposed Standardized Approach for
Counterparty Credit Risk on Derivative
Contracts
1. Background
On December 17, 2018, the agencies
published an NPR to implement a new
approach for calculating the exposure
amount of derivative contracts under
the capital rule: the standardized
approach for counterparty credit risk
(SA–CCR) (SA–CCR proposal).40
The SA–CCR proposal would replace
the current exposure methodology
(CEM) with SA–CCR in the capital rule
for advanced approaches institutions.
Under the advanced approaches, an
advanced approaches institution would
have to choose either SA–CCR or the
internal models methodology to
calculate the exposure amount of its
noncleared and cleared derivative
contracts and use SA–CCR to determine
the risk-weighted asset amount of its
default fund contributions. In addition,
an advanced approaches institution
would be required to use SA–CCR
(instead of CEM) to calculate the
40 83
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exposure amount of its noncleared and
cleared derivative contracts and to
determine the risk-weighted asset
amount of its default fund contributions
under the standardized approach, as
well as to determine the exposure
amount of its derivative contracts for
purposes of the SLR.
Under the SA–CCR proposal, a nonadvanced approaches institution would
be able to use either CEM or SA–CCR to
calculate the exposure amount of its
noncleared and cleared derivative
contracts and to determine the riskweighted asset amount of its default
fund contributions under the
standardized approach. A Category III
banking organization would also use
SA–CCR for calculating its SLR if it
chooses to use SA–CCR to calculate its
derivative and default fund exposures.
The agencies propose to revise the
instructions for Call Report Schedule
RC–R, Part II, as well as to SLR Table
2 in FFIEC 101 Schedule A, to
implement the proposed changes to the
calculation of the exposure amount of
derivative contracts under the agencies’
capital rule. If modifications are made to
the SA–CCR proposal when it is
adopted in final form, the agencies
would modify the Call Report and
FFIEC 101 proposals to incorporate such
changes.
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2. Proposed Revisions to Call Report
Schedule RC–R, Part II
A banking organization must report
the notional amount and regulatory
capital exposure amount of its
derivatives exposures in Schedule RC–
R, Part II. The agencies propose to revise
the instructions for Schedule RC–R, Part
II, consistent with the SA–CCR
proposal. Generally, the proposed
revisions to the reporting of derivatives
elements in Schedule RC–R, Part II, are
driven by the treatment of cleared
derivatives’ variation margin (settled-tomarket versus collateralized-to-market),
netting provisions impacting the
calculations of notional and exposure
amounts, and attributions of derivatives
to cleared versus noncleared
derivatives. The General Instructions for
Schedule RC–R, Part II, and the
instructions for Schedule RC–R, Part II,
items 20, 21, and Memorandum items 1
through 3 would be revised.
3. Proposed Revisions to FFIEC 101
Schedule A, SLR Table 2
An advanced approaches institution
must report the exposure amount of its
derivatives in SLR Table 2 of FFIEC 101
Schedule A. The agencies propose to
revise the instructions for SLR Table 2
consistent with the SA–CCR proposal.
In particular, institutions that are
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required to use SA–CCR for the purpose
of the SLR would apply the SA–CCRbased exposure amount without
consideration of the various collateral
items currently listed in the instructions
for SLR Table 2. Institutions that
continue to use the current exposure
method would use the current
instructions to complete SLR Table 2.
G. High Volatility Commercial Real
Estate (HVCRE) Land Development
Proposal
1. Background
On September 28, 2018, the agencies
published an HVCRE NPR to revise the
HVCRE exposure definition in section 2
of the capital rule 41 to conform to the
statutory definition of an HVCRE ADC
loan.42 Consistent with section 214 of
the EGRRCPA, the agencies proposed in
the HVCRE NPR to exclude credit
facilities that finance the acquisition,
development, or construction of one- to
four-family residential properties from
the definition of HVCRE exposure.
Section 214 became effective upon
enactment of the EGRRCPA.
Accordingly, on July 6, 2018, the
agencies issued a statement (interagency
statement), advising institutions that,
when determining which loans should
be subject to a heightened risk weight,
they may choose to continue to apply
the current regulatory definition of
HVCRE exposure, or they may choose to
apply the heightened risk weight only to
those loans they reasonably believe
meet the definition of ‘‘HVCRE ADC
loan’’ set forth in section 214 of the
EGRRCPA.43 Until the agencies take
further action, institutions are advised
to reference the interagency statement
for purposes of the HVCRE exposure
definition and regulatory reporting.
On July 23, 2019, the agencies
published the HVCRE Land
Development NPR,44 which would
expand upon the HVCRE NPR to revise
the definition of HVCRE exposure in the
capital rule by adding a new paragraph
that provides that the exclusion for oneto four-family residential properties
would not include credit facilities that
solely finance land development
activities, such as the laying of sewers,
water pipes, and similar improvements
to land, without any construction of
41 12 CFR part 3 (OCC); 12 CFR part 217 (Board);
and 12 CFR part 324 (FDIC).
42 See 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board);
and 12 CFR 324.2 (FDIC).
43 Board, FDIC, and OCC, Interagency statement
regarding the impact of the Economic Growth,
Regulatory Relief, and Consumer Protection Act
(EGRRCPA), https://www.federalreserve.gov/
newsevents/pressreleases/files/
bcreg20180706a1.pdf.
44 84 FR 35344 (July 23, 2019).
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one- to four-family residential
structures. In order for a loan to be
eligible for this exclusion, the credit
facility would be required to include
financing for construction of one- to
four-family residential structures. This
proposed revision to the capital rule
would generally align with the
instructions for item 1.a.(2) of Call
Report Schedule RC–C, Part I, and FR
Y–9C, Schedule HC–C.
Allowing institutions to apply a
consistent definition of one- to fourfamily residential property and land
development in this manner would
simplify reporting requirements, reduce
burden, and promote uniform
application of the capital rule.
2. Proposed Revisions to Call Report
Schedule RC–R, Part II
If the agencies adopt a final rule
under section 214 of the EGRRCPA,
such final rule would supersede the July
6, 2018, interagency statement and
institutions would be required to apply
the HVCRE definition in that rule.
Therefore, the agencies are proposing
conforming revisions to the instructions
for Schedule RC–R, Part II, items 4.b
and 5.b, in all versions of the Call
Report. No revisions to the Call Report
forms would be necessary.
3. Proposed Revisions to FFIEC 101
Schedule G
The changes to the HVCRE definition
discussed above would also affect the
instructions for Schedule G—Wholesale
Exposure. Therefore, the agencies are
proposing conforming revisions to the
FFIEC 101 instructions to align with the
new HVCRE definition in the final rule
implementing section 214.
H. Operating Lease Liabilities
In February 2016, the Financial
Accounting Standards Board (FASB)
issued ASU No. 2016–02, ‘‘Leases,’’
which added Topic 842, Leases, to the
Accounting Standards Codification
(ASC). Once ASU 2016–02 is effective
for an institution, the ASU’s accounting
requirements, as amended by certain
subsequent ASUs, supersede ASC Topic
840, Leases.
The most significant change that ASC
Topic 842 makes to the previous lease
accounting requirements is to lessee
accounting. Under the lease accounting
standards in ASC Topic 840, lessees
recognize lease assets and lease
liabilities on the balance sheet for
capital leases, but do not recognize
operating leases on the balance sheet.
The lessee accounting model under
Topic 842 retains the distinction
between operating leases and capital
leases, which the new standard labels
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finance leases. However, the new
standard requires lessees to record a
right-of-use (ROU) asset and a lease
liability on the balance sheet for
operating leases. (For finance leases, a
lessee’s lease asset also is designated an
ROU asset.) In general, the new standard
permits a lessee to make an accounting
policy election to exempt leases with a
term of one year or less at their
commencement date from on-balance
sheet recognition.
For institutions that are public
business entities, as defined under U.S.
generally accepted accounting
principles (GAAP), ASU 2016–02 is
effective for fiscal years beginning after
December 15, 2018, including interim
reporting periods within those fiscal
years. For institutions that are not
public business entities, at present, the
new standard is effective for fiscal years
beginning after December 15, 2019, and
interim reporting periods within fiscal
years beginning after December 15,
2020.45 Early application of the new
standard is permitted for all institutions.
The Call Report Supplemental
Instructions for March 2019 46 stated
that a lessee should report lease
liabilities for operating leases and
finance leases, including lease liabilities
recorded upon adoption of the ASU, in
Schedule RC–M, items 5.b, ‘‘Other
borrowings,’’ and 10.b, ‘‘Amount of
‘Other borrowings’ that are secured,’’
which is consistent with the current
Call Report instructions for reporting a
lessee’s obligations under capital leases
under ASC Topic 840. In response to
this instructional guidance, the agencies
received questions from institutions
concerning the reporting of a bank
lessee’s lease liabilities for operating
leases. These institutions indicated that
reporting operating lease liabilities as
other liabilities instead of other
borrowings would better align the
reporting of the single noninterest
expense item for operating leases in the
income statement (which is the
presentation required by ASC Topic
842) with their balance sheet
classification and would be consistent
45 On August 15, 2019, the FASB issued a
proposal that would amend the effective date of
ASC Topic 842 for institutions that are not public
business entities. As proposed, ASC Topic 842
would be effective for such institutions for fiscal
years beginning after December 15, 2020, and
interim reporting periods within fiscal years
beginning after December 15, 2021. The FASB
would retain the existing effective date for ASC
Topic 842 for public business entities. Early
adoption would continue to be allowed.
46 https://www.ffiec.gov/pdf/FFIEC_forms/
FFIEC031_FFIEC041_FFIEC051_suppinst_
201903.pdf.
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with how these institutions report
operating lease liabilities internally.
The agencies have considered the
views expressed by these institutions
and propose to require that operating
lease liabilities be reported on the Call
Report balance sheet in Schedule RC,
item 20, ‘‘Other liabilities.’’ In Schedule
RC–G, Other Liabilities, operating lease
liabilities would be reported in item 4,
‘‘All other liabilities.’’ In subitems of
Schedule RC–G, item 4, institutions
must itemize and describe any
components of this item in amounts
greater than $100,000 that exceed 25
percent of the amount reported in item
4. Because of the expected prevalence of
operating lease liabilities, the agencies
also propose to add a new subitem with
the preprinted caption ‘‘Operating lease
liabilities’’ to item 4 to facilitate the
reporting of these liabilities when their
amount exceeds the reporting threshold
for itemizing and describing
components of ‘‘All other liabilities.’’
As described in the Call Report
Supplemental Instructions for June
2019, while the agencies are in the
process of proposing this instructional
revision, the agencies are permitting
institutions to report the lease liability
for operating leases in either Schedule
RC–G, item 4, ‘‘All other liabilities,’’ or
Schedule RC–M, item 5.b, ‘‘Other
borrowings.’’ 47 If an institution chooses
the latter reporting treatment, the
amount of operating lease liabilities
reported in Schedule RC–M, item 5.b,
should also be reported in Schedule
RC–M, item 10.b, ‘‘Amount of ‘Other
borrowings’ that are secured,’’ and this
amount should not be reported in
Schedule RC–O, item 7, as ‘‘Unsecured
‘Other borrowings’.’’ An institution may
choose to amend the reporting of
operating lease liabilities in its Call
Report for March 31, 2019, consistent
with this instructional guidance.
I. Reporting Home Equity Lines of Credit
That Convert From Revolving to NonRevolving Status
Institutions report the amount
outstanding under revolving, open-end
lines of credit secured by 1–4 family
residential properties (commonly
known as home equity lines of credit or
HELOCs) in item 1.c.(1) of Schedule
RC–C, Part I, Loans and Leases. The
amounts of closed-end loans secured by
1–4 family residential properties are
reported in Schedule RC–C, Part I, item
47 See the Call Report Supplemental Instructions
for June 2019, https://www.ffiec.gov/pdf/FFIEC_
forms/FFIEC031_FFIEC041_FFIEC051_suppinst_
201906.pdf.
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53239
1.c.(2)(a) or (b), depending on whether
the loan is a first or a junior lien.48
A HELOC is a line of credit secured
by a lien on a 1–4 family residential
property that generally provides a draw
period followed by a repayment period.
During the draw period, a borrower has
revolving access to unused amounts
under a specified line of credit. During
the repayment period, the borrower can
no longer draw on the line of credit, and
the outstanding principal is either due
immediately in a balloon payment or
repaid over the remaining loan term
through monthly payments. Because the
Call Report instructions do not address
the reporting treatment for a home
equity line of credit when it reaches its
end-of-draw period and converts from
revolving to nonrevolving status, the
agencies have found diversity in how
these credits are reported in Schedule
RC–C, Part I, items 1.c.(1), 1.c.(2)(a), and
1.c.(2)(b), and in other Call Report items
that use the definitions of these three
loan categories.
In September 2015, to address this
absence of instructional guidance and
promote consistency in reporting, the
agencies proposed to clarify the
instructions for reporting loans secured
by 1–4 family residential properties by
specifying that after a revolving openend line of credit has converted to nonrevolving closed-end status, the loan
should be reported as closed-end in
Schedule RC–C, Part I, item 1.c.(2)(a) or
(b), as appropriate.49 As discussed in a
subsequent notice,50 the agencies
received a number of comments that
raised concerns with the proposal. In
particular, some commenters stated that
reclassifying HELOCs after the draw
period could raise operational
challenges for institutions’ loan systems
that would require additional time to
implement. Based on the feedback
received, the agencies did not proceed
with their proposed instructional
clarification at that time.
The agencies continue to believe that
it is important to collect accurate data
on loans secured by 1–4 family
residential properties in the Call Report.
Consistent classification of HELOCs
based on the status of the draw period
is particularly important for the
agencies’ safety and soundness
monitoring. Due to the structure of
HELOCs discussed above, borrowers
generally are not required to make
48 Institutions report additional information on
open-end and closed-end loans secured by 1–4
family residential properties in certain other Call
Report schedules in accordance with the loan
category definitions in Schedule RC–C, Part I, items
1.c.(1), 1.c.(2)(a), and 1.c.(2)(b).
49 See 80 FR 56539 (September 18, 2015).
50 See 81 FR 45357 (July 13, 2016).
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principal repayments during the draw
period, which may create a financial
shock for borrowers when they must
make a balloon payment or begin
regular monthly repayments after the
draw period. With some institutions
reporting HELOCs past the draw period
as revolving, this increases the amounts
outstanding, charge-offs, recoveries, past
dues, and nonaccruals reported in the
open-end category relative to the
amounts reported by institutions that
treat HELOCs past the draw period as
closed-end, which makes the data less
useful for agency comparisons and
safety and soundness monitoring. In
addition, in ASU No. 2019–04,51 the
FASB amended ASC Subtopic 326–20
on credit losses to require that, when
presenting credit quality disclosures in
notes to financial statements prepared
in accordance with U.S. GAAP, an
entity must separately disclose line-ofcredit arrangements that are converted
to term loans from line-of-credit
arrangements that remain in revolving
status. After further review, the agencies
have determined that there would be
little or no impact to the regulatory
capital calculations, FDIC deposit
insurance assessments, or other
regulatory reporting requirements as a
result of this clarification, which were
other concerns previously raised by
commenters.
Therefore, the agencies are reproposing to clarify the Call Report
instructions for Schedule RC–C, Part I,
items 1.c.(1), 1.c.(2)(a), and 1.c.(2)(b), to
state that revolving open-end lines of
credit that have converted to nonrevolving closed-end status should be
reported as closed-end loans. The effect
of this clarification would extend to the
instructions for the following data items
that reference the Schedule RC–C, Part
I, loan category definitions for open-end
and closed-end loans secured by 1–4
family residential properties:
• Schedule RI–B, Part I, items 1.c.(1),
1.c.(2)(a), and 1.c.(2)(b);
• Schedule RC–C, Part I,
Memorandum items 2.a.(1) through (6)
and 2.b.(1) through (6);
• Schedule RC–M, items
13.a.(1)(c)(1), 13.a.(1)(c)(2)(a), and
13.a.(1)(c)(2)(b) on the FFIEC 031 and
FFIEC 041;
• Schedule RC–N, items 1.c.(1),
1.c.(2)(a), and 1.c.(2)(b);
• Schedule RC–N, items 12.a.(3)(a),
12.a.(3)(b)(1), and 12.a.(3)(b)(2) on the
FFIEC 031 and FFIEC 041;
• Schedule RC–O, Memorandum
items 18.b, 18.c, and 18.d on the FFIEC
031 and FFIEC 041;
• Schedule RC–S, Memorandum
items 2.a, 2.b, and 2.c on the FFIEC 031
and FFIEC 041; and
• Schedule SU, items 6 and 6.a on the
FFIEC 051.
This instructional clarification would
not apply to the reporting of assetbacked securities collateralized by
HELOCs in Schedule RC–B,
Memorandum item 5.b, on the FFIEC
031 and FFIEC 041 and Schedule RC–
D, Memorandum item 5.b on the FFIEC
031 and securitizations of closed-end 1–
4 family residential loans and home
equity lines in Schedule RC–S, columns
A and B, on the FFIEC 031, and
columns A and G on the FFIEC 041.
To address prior comments regarding
the time needed for any systems
changes, the agencies propose that
compliance with the clarified
instructions would not be required until
the March 31, 2021, report date.
Institutions not currently reporting in
accordance with the clarified
instructions would be permitted, but not
required, to report in accordance with
the clarified instructions before that
date.
III. Timing
The agencies propose to make the
capital-related reporting changes in this
notice effective the same quarters as the
effective dates of the various currently
final or potential final capital rules
discussed in this notice. The agencies
also propose that the changes in the
scope of the FFIEC 031 Call Report and
in the reporting of operating lease
liabilities would be effective March 31,
2020, and the changes in the reporting
of construction, land development, and
other land loans with interest reserves
and home equity lines of credit would
be effective March 31, 2021. The
agencies invite comment on any
difficulties that institutions would
expect to encounter in implementing
the systems changes necessary to
accommodate the proposed revisions to
the Call Reports and the FFIEC 101
report or the minimum time required to
make systems changes to implement
these changes.
The specific wording of the captions
for the new or revised Call Report data
items discussed in this proposal and the
numbering of these data items should be
regarded as preliminary.
IV. Request for Comment
51 ASU
No. 2019–04, ‘‘Codification Improvements
to Topic 326, Financial Instruments—Credit Losses,
Topic 815, Derivatives and Hedging, and Topic 825,
Financial Instruments,’’ issued in April 2019.
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Public comment is requested on all
aspects of this joint notice. Comment is
specifically invited on:
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(a) As an alternative to the approach
proposed for reporting in Schedule RC–
R, Part I, in the FFIEC 041 and FFIEC
051 Call Reports for March 31, 2020, by
non-advanced approaches institutions
that choose not to early adopt the
simplifications rule (discussed in
Section II.A.1. above), which would
have the agencies provide instructions
on how such institutions should
complete this schedule as of that report
date, whether the agencies should
instead provide separate columns in
Schedule RC–R, Part I, in the FFIEC 041
and FFIEC 051 Call Reports for the
March 31, 2020, report date that would
enable institutions to report in either the
column for the simplifications rule or
the column for the current capital rule
for that report date? This alternative
approach would be similar to the
proposed two-column approach in
Schedule RC–R, Part I, for the FFIEC
031 Call Report, but the two columns
would be included in the FFIEC 041 and
FFIEC 051 Call Reports only for the
March 31, 2020, report date and the
second column would be removed from
these two reports effective June 30,
2020, when the simplifications rule
would apply to all non-advanced
approaches institutions.
(b) For advanced approaches banking
organizations, whether the agencies
should include items related to LTD and
TLAC amounts, ratios, and the TLAC
buffer in the FFIEC 101. Please describe
the benefits and drawbacks of including
these items in the FFIEC 101.
(c) For the reporting of derivatives
data in Call Report Schedules RC–D,
RC–F, RC–G, RC–L (or SU on the 051),
and RC–R, Part II, the degree to which
the agencies should align the reporting
approaches applicable to these
schedules. In particular, please describe
how the agencies can ensure data
consistency while reducing the burden
of reporting the fair values, notional
amounts, and exposure amounts of
derivatives for settled-to-market and
collateralized-to-market derivatives in
Schedules RC–D, RC–F, RC–G, RC–L (or
SU on the 051), and RC–R, Part II, as
applicable. Please address whether the
agencies should adopt a consistent
classification of derivatives by asset
class (e.g., interest rate, energy, and
volatility derivative contracts) and by
product type (e.g., cleared swap, futures
contract, exchange-traded option).
(d) Whether the proposed revisions to
the collections of information that are
the subject of this notice are necessary
for the proper performance of the
agencies’ functions, including whether
the information has practical utility;
(e) The accuracy of the agencies’
estimates of the burden of the
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information collections as they are
proposed to be revised, including the
validity of the methodology and
assumptions used;
(f) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
(g) Ways to minimize the burden of
information collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
(h) Estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to provide information.
Comments submitted in response to
this joint notice will be shared among
the agencies.
Dated: October 1, 2019.
Theodore J. Dowd,
Deputy Chief Counsel, Office of the
Comptroller of the Currency.
Board of Governors of the Federal Reserve
System, September 30, 2019.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
Dated at Washington, DC, on September
30, 2019.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019–21659 Filed 10–3–19; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
Notice of OFAC Sanctions Actions
Office of Foreign Assets
Control, Treasury.
ACTION: Notice.
AGENCY:
The Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is publishing the names
of one or more persons, aircraft, and
vessel that have been placed on OFAC’s
Specially Designated Nationals and
Blocked Persons List based on OFAC’s
determination that one or more
applicable legal criteria were satisfied.
All property and interests in property
subject to U.S. jurisdiction of these
persons, aircraft, and this vessel are
blocked, and U.S. persons are generally
prohibited from engaging in transactions
with them.
DATES: See SUPPLEMENTARY INFORMATION
section for effective date(s).
FOR FURTHER INFORMATION CONTACT:
OFAC: Associate Director for Global
Targeting, tel.: 202–622–2420; Assistant
Director for Sanctions Compliance &
Evaluation, tel.: 202–622–2490;
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SUMMARY:
VerDate Sep<11>2014
16:49 Oct 03, 2019
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Assistant Director for Licensing, tel.:
202–622–2480; or Assistant Director for
Regulatory Affairs, tel.: 202–622–4855.
SUPPLEMENTARY INFORMATION:
Electronic Availability
The Specially Designated Nationals
and Blocked Persons List and additional
information concerning OFAC sanctions
programs are available on OFAC’s
website (https://www.treasury.gov/ofac).
Notice of OFAC Actions
On September 30, 2019, OFAC
determined that the property and
interests in property subject to U.S.
jurisdiction of the following persons
and the following aircraft and vessel
subject to U.S. jurisdiction are blocked
under the relevant sanctions authorities
listed below.
Individuals
1. ASLANOV, Dzheykhun Nasimi Ogly
(a.k.a. ASLANOV, Jay; a.k.a. ASLANOV,
Jayhoon), Russia; DOB 01 Jan 1990; POB
Sumgait, Azerbaijan; nationality Russia;
Gender Male; Passport 629512112 (Russia);
National ID No. 2504139886 (individual)
[CYBER2] [ELECTION–EO13848] (Linked To:
INTERNET RESEARCH AGENCY LLC).
Designated pursuant to section 2(a)(ii) of
Executive Order 13848 of September 12,
2018, ‘‘Imposing Certain Sanctions in the
Event of Foreign Interference in a United
States Election,’’ (E.O. 13848) for having
materially assisted, sponsored, or provided
financial, material, or technological support
for, or goods or services to or in support of,
the INTERNET RESEARCH AGENCY, an
entity whose property and interests in
property are blocked pursuant to E.O. 13848.
Also designated pursuant to section
2(a)(iii) of E.O. 13848 for having acted or
purported to act for or on behalf of, directly
or indirectly, the INTERNET RESEARCH
AGENCY, an entity whose property and
interests in property are blocked pursuant to
E.O. 13848.
2. BURCHIK, Mikhail Leonidovich (a.k.a.
ABRAMOV, Mikhail), Russia; DOB 07 Jun
1986; Gender Male (individual) [CYBER2]
[ELECTION–EO13848] (Linked To:
INTERNET RESEARCH AGENCY LLC).
Designated pursuant to section 2(a)(ii) of
E.O. 13848 for having materially assisted,
sponsored, or provided financial, material, or
technological support for, or goods or
services to or in support of, the INTERNET
RESEARCH AGENCY, an entity whose
property and interests in property are
blocked pursuant to E.O. 13848.
Also designated pursuant to section
2(a)(iii) of E.O. 13848 for having acted or
purported to act for or on behalf of, directly
or indirectly, the INTERNET RESEARCH
AGENCY, an entity whose property and
interests in property are blocked pursuant to
E.O. 13848.
3. KUZMIN, Denis Igorevich, Russia; DOB
18 Dec 1990; Gender Male (individual)
[ELECTION–EO13848] (Linked To:
INTERNET RESEARCH AGENCY LLC).
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53241
Designated pursuant to section 2(a)(ii) of
E.O. 13848 for having materially assisted,
sponsored, or provided financial, material, or
technological support for, or goods or
services to or in support of, the INTERNET
RESEARCH AGENCY, an entity whose
property and interests in property are
blocked pursuant to E.O. 13848.
Also designated pursuant to section
2(a)(iii) of E.O. 13848 for having acted or
purported to act for or on behalf of, directly
or indirectly, the INTERNET RESEARCH
AGENCY, an entity whose property and
interests in property are blocked pursuant to
E.O. 13848.
4. NESTEROV, Igor Vladimirovich, Russia;
DOB 07 Feb 1985; citizen Russia; Gender
Male (individual) [ELECTION–EO13848]
(Linked To: INTERNET RESEARCH AGENCY
LLC).
Designated pursuant to section 2(a)(ii) of
E.O. 13848 for having materially assisted,
sponsored, or provided financial, material, or
technological support for, or goods or
services to or in support of, the INTERNET
RESEARCH AGENCY, an entity whose
property and interests in property are
blocked pursuant to E.O. 13848.
Also designated pursuant to section
2(a)(iii) of E.O. 13848 for having acted or
purported to act for or on behalf of, directly
or indirectly, the INTERNET RESEARCH
AGENCY, an entity whose property and
interests in property are blocked pursuant to
E.O. 13848.
5. PODKOPAEV, Vadim Vladimirovich
(a.k.a. PODKOPAYEV, Vadim), Russia; DOB
01 May 1985; Gender Male (individual)
[CYBER2] [ELECTION–EO13848] (Linked To:
INTERNET RESEARCH AGENCY LLC).
Designated pursuant to section 2(a)(ii) of
E.O. 13848 for having materially assisted,
sponsored, or provided financial, material, or
technological support for, or goods or
services to or in support of, the INTERNET
RESEARCH AGENCY, an entity whose
property and interests in property are
blocked pursuant to E.O. 13848.
Also designated pursuant to section
2(a)(iii) of E.O. 13848 for having acted or
purported to act for or on behalf of, directly
or indirectly, the INTERNET RESEARCH
AGENCY, an entity whose property and
interests in property are blocked pursuant to
E.O. 13848.
6. PRIGOZHIN, Yevgeniy Viktorovich
(a.k.a. PRIGOZHIN, Evgeny), Russia; DOB 01
Jun 1961; Gender Male (individual)
[UKRAINE–EO13661] [CYBER2]
[ELECTION–EO13848] (Linked To:
INTERNET RESEARCH AGENCY LLC).
Designated pursuant to section 2(a)(ii) of
E.O. 13848 for having materially assisted,
sponsored, or provided financial, material, or
technological support for, or goods or
services to or in support of, the INTERNET
RESEARCH AGENCY, an entity whose
property and interests in property are
blocked pursuant to E.O. 13848.
7. VENKOV, Vladimir Dmitriyevich (a.k.a.
VENKOV, Vladimir), Russia; DOB 28 May
1990; Gender Male (individual) [CYBER2]
[ELECTION–EO13848] (Linked To:
INTERNET RESEARCH AGENCY LLC).
Designated pursuant to section 2(a)(ii) of
E.O. 13848 for having materially assisted,
E:\FR\FM\04OCN1.SGM
04OCN1
Agencies
[Federal Register Volume 84, Number 193 (Friday, October 4, 2019)]
[Notices]
[Pages 53227-53241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21659]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE CORPORATION
Proposed Agency Information Collection Activities; Comment
Request
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury;
Board of Governors of the Federal Reserve System (Board); and Federal
Deposit Insurance Corporation (FDIC).
ACTION: Joint notice and request for comment.
-----------------------------------------------------------------------
SUMMARY: In accordance with the requirements of the Paperwork Reduction
Act of 1995 (PRA), the OCC, the Board, and the FDIC (the ``agencies'')
may not conduct or sponsor, and the respondent is not required to
respond to, an information collection unless it displays a currently
valid Office of Management and Budget (OMB) control number. The Federal
Financial Institutions Examination Council (FFIEC), of which the
agencies are members, has approved the agencies' publication for public
comment of a proposal to revise and extend the Consolidated Reports of
Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC
051) and the Regulatory Capital Reporting for Institutions Subject to
the Advanced Capital Adequacy Framework (FFIEC 101), which are
currently approved collections of information. The proposed revisions
to the Call Reports and the FFIEC 101 would implement various changes
to the agencies' capital rule that the agencies have finalized or are
considering finalizing. In addition, the agencies are proposing a
change in the scope of the FFIEC 031 Call Report as well as an
instructional revision for the reporting of operating lease liabilities
in the Call Reports, both of which would take effect March 31, 2020,
and a Call Report instructional revision for home equity lines of
credit that convert from revolving to non-revolving status that would
take effect March 31, 2021.
DATES: Comments must be submitted on or before December 3, 2019.
ADDRESSES: Interested parties are invited to submit written comments to
any or all of the agencies. All comments, which should refer to the
``Call Report and FFIEC 101 Reporting Revisions,'' will be shared among
the agencies.
OCC: You may submit comments, which should refer to ``Call Report
and FFIEC 101 Reporting Revisions,'' by any of the following methods:
Email: [email protected].
Mail: Chief Counsel's Office, Office of the Comptroller of
the Currency, Attention: 1557-0081 and 1557-0239, 400 7th Street SW,
Suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``1557-
[[Page 53228]]
0081 and 1557-0239'' in your comment. In general, the OCC will publish
comments on www.reginfo.gov without change, including any business or
personal information provided, such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this information collection beginning on the date of publication of the
second notice for this collection by any of the following methods:
Viewing Comments Electronically: Go to www.reginfo.gov.
Click on the ``Information Collection Review'' tab. Underneath the
``Currently under Review'' section heading, from the drop-down menu
select ``Department of Treasury'' and then click ``submit.'' This
information collection can be located by searching by OMB control
number ``1557-0081'' or ``1557-0239.'' Upon finding the appropriate
information collection, click on the related ``ICR Reference Number.''
On the next screen, select ``View Supporting Statement and Other
Documents'' and then click on the link to any comment listed at the
bottom of the screen.
For assistance in navigating www.reginfo.gov, please
contact the Regulatory Information Service Center at (202) 482-7340.
Viewing Comments Personally: You may personally inspect
comments at the OCC, 400 7th Street SW, Washington, DC. For security
reasons, the OCC requires that visitors make an appointment to inspect
comments. You may do so by calling (202) 649-6700 or, for persons who
are deaf or hearing impaired, TTY, (202) 649-5597. Upon arrival,
visitors will be required to present valid government-issued photo
identification and submit to security screening in order to inspect
comments.
Board: You may submit comments, which should refer to ``Call Report
and FFIEC 101 Reporting Revisions,'' by any of the following methods:
Agency Website: https://www.federalreserve.gov. Follow the
instructions for submitting comments at: https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Email: [email protected]. Include ``Call
Report and FFIEC 101 Reporting Revisions'' in the subject line of the
message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments are available on the Board's website at https://www.federalreserve.gov/apps/foia/proposedregs.aspx as submitted,
unless modified for technical reasons. Accordingly, your comments will
not be edited to remove any identifying or contact information. Public
comments may also be viewed electronically or in paper in Room 146,
1709 New York Avenue NW, Washington, DC 20006, between 9:00 a.m. and
5:00 p.m. on weekdays. For security reasons, the Board requires that
visitors make an appointment to inspect comments. You may do so by
calling (202) 452-3684. Upon arrival, visitors will be required to
present valid government-issued photo identification and to submit to
security screening in order to inspect and photocopy comments.
FDIC: You may submit comments, which should refer to ``Call Report
and FFIEC 101 Reporting Revisions,'' by any of the following methods:
Agency Website: https://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the FDIC's
website.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include ``Call Report and FFIEC
101 Reporting Revisions'' in the subject line of the message.
Mail: Manuel E. Cabeza, Counsel, Attn: Comments, Room MB-
3128, Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7:00 a.m. and 5:00 p.m.
Public Inspection: All comments received will be posted
without change to https://www.fdic.gov/regulations/laws/federal/
including any personal information provided. Paper copies of public
comments may be requested from the FDIC Public Information Center, 3501
North Fairfax Drive, Arlington, VA 22226, or by telephone at (877) 275-
3342 or (703) 562-2200.
Additionally, commenters may send a copy of their comments to the
OMB desk officer for the agencies by mail to the Office of Information
and Regulatory Affairs, U.S. Office of Management and Budget, New
Executive Office Building, Room 10235, 725 17th Street NW, Washington,
DC 20503; by fax to (202) 395-6974; or by email to
[email protected].
FOR FURTHER INFORMATION CONTACT: For further information about the
proposed revisions to the information collections discussed in this
notice, please contact any of the agency staff whose names appear
below. In addition, copies of the report forms for the Call Report and
the FFIEC 101 can be obtained at the FFIEC's website (https://www.ffiec.gov/ffiec_report_forms.htm).
OCC: Kevin Korzeniewski, Counsel, Chief Counsel's Office, (202)
649-5490, or for persons who are deaf or hearing impaired, TTY, (202)
649-5597.
Board: Nuha Elmaghrabi, Federal Reserve Board Clearance Officer,
(202) 452-3884, Office of the Chief Data Officer, Board of Governors of
the Federal Reserve System, 20th and C Streets NW, Washington, DC
20551. Telecommunications Device for the Deaf (TDD) users may call
(202) 263-4869.
FDIC: Manuel E. Cabeza, Counsel, (202) 898-3767, Legal Division,
Federal Deposit Insurance Corporation, 550 17th Street NW, Washington,
DC 20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Affected Reports
A. Call Reports
B. FFIEC 101
II. Current Actions
A. Simplifications Rule
1. Background
2. Proposed Revisions to Call Report Schedule RC-R
B. Community Bank Leverage Ratio Rule
1. Background
2. Proposed Revisions to Call Report Schedule RC-R
3. Other Proposed Call Report Revisions Related to the CBLR
C. Proposed Tailoring Rules
1. Background
2. Proposed Revisions to Call Report Schedule RC-R, Part I
3. Proposed Revisions to the FFIEC 101
D. Proposed Total Loss Absorbing Capacity Holdings Rule
1. Background
2. Proposed Revisions to Call Report Schedule RC-R, Part I
3. Proposed Revisions to Call Report Schedule RC-R, Part II
4. Proposed Revisions to FFIEC 101 Schedule A
i. Deductions From Regulatory Capital
ii. LTD and TLAC Amounts, Ratios, and Buffer
E. Proposed Revisions to the Supplementary Leverage Ratio for
Certain Central Bank Deposits of Custodial Banks
1. Background
2. Proposed Revisions to Call Report Schedule RC-R, Part I
3. Proposed Revisions to FFIEC 101 Schedule A
[[Page 53229]]
F. Proposed Standardized Approach for Counterparty Credit Risk
on Derivative Contracts
1. Background
2. Proposed Revisions to Call Report Schedule RC-R, Part II
3. Proposed Revisions to FFIEC 101 Schedule A, SLR Table 2
G. High Volatility Commercial Real Estate (HVCRE) Land
Development Proposal
1. Background
2. Proposed Revisions to Call Report Schedule RC-R, Part II
3. Proposed Revisions to FFIEC 101 Schedule G
H. Operating Lease Liabilities
I. Reporting Home Equity Lines of Credit That Convert From
Revolving to Non-Revolving Status
III. Timing
IV. Request for Comment
I. Affected Reports
All of the proposed changes discussed below affect the Call
Reports, while a number of the changes also affect the FFIEC 101. The
Board will separately propose to make corresponding revisions to the
Consolidated Financial Statements for Holding Companies (FR Y-9C).\1\
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\1\ Consolidated Financial Statements for Holding Companies (FR
Y-9C), OMB Number 7100-0128.
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A. Call Reports
The agencies propose to extend for three years, with revision, the
FFIEC 031, FFIEC 041, and FFIEC 051 Call Reports.
Report Title: Consolidated Reports of Condition and Income (Call
Report).
Form Number: FFIEC 031 (Consolidated Reports of Condition and
Income for a Bank with Domestic and Foreign Offices), FFIEC 041
(Consolidated Reports of Condition and Income for a Bank with Domestic
Offices Only, and FFIEC 051 (Consolidated Reports of Condition and
Income for a Bank with Domestic Offices Only and Total Assets Less Than
$5 Billion).
Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
Type of Review: Revision and extension of currently approved
collections.
OCC
OMB Control No.: 1557-0081.
Estimated Number of Respondents: 1,152 national banks and federal
savings associations.
Estimated Average Burden per Response: 39.74 burden hours per
quarter to file.
Estimated Total Annual Burden: 183,122 burden hours to file.
Board
OMB Control No.: 7100-0036.
Estimated Number of Respondents: 781 state member banks.
Estimated Average Burden per Response: 43.64 burden hours per
quarter to file.
Estimated Total Annual Burden: 136,331 burden hours to file.
FDIC
OMB Control No.: 3064-0052.
Estimated Number of Respondents: 3,419 insured state nonmember
banks and state savings associations.
Estimated Average Burden per Response: 38.47 burden hours per
quarter to file.
Estimated Total Annual Burden: 526,116 burden hours to file.
The estimated average burden hours collectively reflect the
estimates for the FFIEC 051, the FFIEC 041, and the FFIEC 031 reports
for each agency. When the estimates are calculated by type of report
across the agencies, the estimated average burden hours per quarter are
35.38 (FFIEC 051), 49.45 (FFIEC 041), and 95.06 (FFIEC 031). The
estimated burden hours for the currently approved reports are 40.27
(FFIEC 051), 53.72 (FFIEC 041), and 95.60 (FFIEC 031), so the revisions
proposed in this notice would represent a reduction in estimated
average burden hours per quarter of 4.89 (FFIEC 051), 4.27 (FFIEC 041),
and 0.54 (FFIEC 031). The change in burden is predominantly due to
changes associated with the community bank leverage ratio rule. The
reduction in average burden hours is significantly less for the FFIEC
031 than for the FFIEC 041 or the FFIEC 051 because greater percentages
of institutions that would be eligible to report under the proposed
community bank leverage ratio framework currently file the FFIEC 041 or
the FFIEC 051 than the FFIEC 031.\2\ The estimated burden per response
for the quarterly filings of the Call Report is an average that varies
by agency because of differences in the composition of the institutions
under each agency's supervision (e.g., size distribution of
institutions, types of activities in which they are engaged, and
existence of foreign offices).
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\2\ For estimating burden hours, the agencies assumed 60 percent
of eligible institutions would use the framework.
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Type of Review: Extension and revision of currently approved
collections.
Legal Basis and Need for Collections
The Call Report information collections are mandatory: 12 U.S.C.
161 (for national banks), 12 U.S.C. 324 (for state member banks), 12
U.S.C. 1817 (for insured state nonmember commercial and savings banks),
and 12 U.S.C. 1464 (for federal and state savings associations). At
present, except for selected data items and text, these information
collections are not given confidential treatment.
Banks and savings associations submit Call Report data to the
agencies each quarter for the agencies' use in monitoring the
condition, performance, and risk profile of individual institutions and
the industry as a whole. Call Report data serve a regulatory or public
policy purpose by assisting the agencies in fulfilling their shared
missions of ensuring the safety and soundness of financial institutions
and the financial system and protecting consumer financial rights, as
well as agency-specific missions affecting national and state-chartered
institutions, such as conducting monetary policy, ensuring financial
stability, and administering federal deposit insurance. Call Reports
are the source of the most current statistical data available for
identifying areas of focus for on-site and off-site examinations. Among
other purposes, the agencies use Call Report data in evaluating
institutions' corporate applications, including interstate merger and
acquisition applications for which the agencies are required by law to
determine whether the resulting institution would control more than 10
percent of the total amount of deposits of insured depository
institutions in the United States. Call Report data also are used to
calculate institutions' deposit insurance assessments and national
banks' and federal savings associations' semiannual assessment fees.
B. FFIEC 101
The agencies propose to extend for three years, with revision, the
FFIEC 101 report.
Report Title: Risk-Based Capital Reporting for Institutions Subject
to the Advanced Capital Adequacy Framework.
Form Number: FFIEC 101.
Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
OCC
OMB Control No.: 1557-0239.
Estimated Number of Respondents: 8 national banks and federal
savings associations.
Estimated Time per Response: 674 burden hours per quarter to file
for banks and federal savings associations.
Estimated Total Annual Burden: 21,568 burden hours to file.
[[Page 53230]]
Board
OMB Control No.: 7100-0319.
Estimated Number of Respondents: 1 state member bank; 4 bank
holding companies and savings and loan holding companies that complete
Supplementary Leverage Ratio (SLR) Tables 1 and 2 only; 9 other bank
holding companies and savings and loan holding companies; and 6
intermediate holding companies.
Estimated Time per Response: 674 burden hours per quarter to file
for state member banks; 3 burden hours per quarter to file for bank
holding companies and savings and loan holding companies that complete
Supplementary Leverage Ratio (SLR) Tables 1 and 2 only; 677 burden
hours per quarter to file for other bank holding companies and savings
and loan holding companies; and 3 burden hours per quarter to file for
intermediate holding companies.
Estimated Total Annual Burden: 2,696 burden hours for state member
banks to file; 48 burden hours for bank holding companies and savings
and loan holding companies that complete Supplementary Leverage Ratio
(SLR) Tables 1 and 2 only to file; 24,372 burden hours for other bank
holding companies and savings and loan holding companies to file; and
72 burden hours for intermediate holding companies to file.
FDIC
OMB Control No.: 3064-0159.
Estimated Number of Respondents: 1 insured state nonmember bank and
state savings association.
Estimated Time per Response: 674 burden hours per quarter to file.
Estimated Total Annual Burden: 2,696 burden hours to file.
Type of Review: Extension and revision of currently approved
collections.
Legal Basis and Need for Collections
Each advanced approaches institution \3\ is required to report
quarterly regulatory capital data on the FFIEC 101. The FFIEC 101
information collections are mandatory for advanced approaches
institutions: 12 U.S.C. 161 (national banks), 12 U.S.C. 324 (state
member banks), 12 U.S.C. 1844(c) (bank holding companies), 12 U.S.C.
1467a(b) (savings and loan holding companies), 12 U.S.C. 1817 (insured
state nonmember commercial and savings banks), 12 U.S.C. 1464 (savings
associations), and 12 U.S.C. 1844(c), 3106, and 3108 (intermediate
holding companies). Certain data items in this information collection
are given confidential treatment under 5 U.S.C. 552(b)(4) and (8).
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\3\ See 12 CFR 3.100(b) (OCC); 12 CFR 217.100(b) (Board); 12 CFR
324.100(b) (FDIC).
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The agencies use data reported in the FFIEC 101 to assess and
monitor the levels and components of each reporting entity's capital
requirements and the adequacy of the entity's capital under the
Advanced Capital Adequacy Framework; \4\ to evaluate the impact of the
Advanced Capital Adequacy Framework on individual reporting entities
and on an industry-wide basis and its competitive implications; and to
supplement on-site examination processes. The reporting schedules also
assist advanced approaches institutions in understanding expectations
relating to the system development necessary for implementation and
validation of the Advanced Capital Adequacy Framework. Submitted data
that are released publicly will also provide other interested parties
with information about advanced approaches institutions' regulatory
capital.
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\4\ 12 CFR part 3, subpart E (OCC); 12 CFR part 217, subpart E
(Board); 12 CFR part 324, subpart E (FDIC).
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II. Current Actions
A. Simplifications Rule
1. Background
On July 22, 2019, the agencies published a final rule amending
their regulatory capital rule \5\ to make a number of burden-reducing
changes to the capital rule (simplifications rule).\6\ In the
simplifications rule, the agencies adopted a simpler methodology for
non-advanced approaches banking organizations \7\ to calculate minority
interest limitations and simplified the regulatory capital treatment of
mortgage servicing assets (MSAs), temporary difference deferred tax
assets (DTAs), and investments in the capital of unconsolidated
financial institutions. The simplifications rule had an effective date
of April 1, 2020. However, the FDIC and the OCC have recently
approved,\8\ and the Board is considering, a planned final rule that
would permit non-advanced approaches banking organizations to implement
the simplifications rule on January 1, 2020. As a result, non-advanced
approaches banking organizations would have the option to implement the
simplifications rule on the revised effective date of January 1, 2020,
or wait until the quarter beginning April 1, 2020.
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\5\ 12 CFR part 3 (OCC); 12 CFR part 217 (Board); 12 CFR part
324 (FDIC). While the agencies have codified the capital rule in
different parts of title 12 of the Code of Federal Regulations, the
internal structure of the sections within each agency's rule are
substantially similar.
\6\ 84 FR 35234 (July 22, 2019).
\7\ Non-advanced approaches banking organizations are
institutions that do not meet the criteria in 12 CFR 3.100(b) (OCC);
12 CFR 217.100(b) (Board); or 12 CFR 324.100(b) (FDIC).
\8\ See FDIC Press Release 80-2019, dated September 17, 2019.
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The agencies propose revisions to Call Report Schedule RC-R,
Regulatory Capital, in all three versions of the Call Report to
implement the associated changes to the agencies' regulatory capital
rule effective as of the March 31, 2020, report date, consistent with
the planned final rule that would permit early adoption of the
simplifications rule.
In addition, the agencies adopted a number of technical amendments
to their regulatory capital rule in the simplifications rule that do
not require clearance under the PRA and would become effective October
1, 2019.
2. Proposed Revisions to Call Report Schedule RC-R
The revisions in the simplifications rule would make a number of
changes to the calculation of common equity tier 1 (CET1) capital,
additional tier 1 capital, and tier 2 capital for non-advanced
approaches institutions that do not apply to advanced approaches
institutions. Thus, the simplifications rule results in different sets
of calculations for these tiers of regulatory capital for non-advanced
approaches institutions and advanced approaches institutions. At
present, the FFIEC 031 and the FFIEC 041 Call Reports are completed by
both non-advanced approaches institutions and advanced approaches
institutions while only non-advanced approaches institutions are
eligible to file the FFIEC 051 Call Report. To mitigate the complexity
of revising existing Schedule RC-R, Part I, Regulatory Capital
Components and Ratios, to incorporate the different sets of regulatory
capital calculations for non-advanced approaches institutions and
advanced approaches institutions, and to reflect the effects of the
simplifications rule in both the FFIEC 031 and FFIEC 041 Call Reports,
the agencies are proposing to require all advanced approaches
institutions to file the FFIEC 031 Call Report effective as of the
March 31, 2020, report date.\9\ As a result, the agencies would adjust
the existing regulatory capital calculations reported on Schedule RC-R,
Part I, for the FFIEC 041 Call Report, and also for the FFIEC 051 Call
Report, to reflect the
[[Page 53231]]
effects of the simplifications rule for non-advanced approaches
institutions. For the FFIEC 031 Call Report, which is filed by the
fewest institutions, the agencies are proposing to incorporate the two
different sets of regulatory capital calculations (one for non-advanced
approaches institutions and the other for advanced approaches
institutions) in Schedule RC-R, Part I, and, as mentioned above,
require all advanced approaches institutions to file this version of
the Call Report.
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\9\ While this proposed change relates to existing advanced
approaches institutions, as discussed in Section II.C. below, the
agencies also propose to require all Category I, II, and III
institutions to file the FFIEC 031 Call Report.
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The agencies propose a number of revisions that would simplify the
capital calculations on each version of Schedule RC-R, Part I,
effective March 31, 2020, and thereby reduce reporting burden. Because
both non-advanced approaches institutions and advanced approaches
institutions file the FFIEC 031 Call Report, the FFIEC 031 Call Report
would include two different sets of calculations (one that incorporates
the effects of the simplifications rule and the other that does not) in
adjacent columns in the affected portion of Schedule RC-R, Part I. An
institution would complete only the column for the set of calculations
applicable to that institution. For the March 31, 2020, report date,
non-advanced approaches institutions that file the FFIEC 031 Call
Report and elect to adopt the simplifications rule on January 1, 2020,
would complete the column for the set of calculations that incorporates
the effects of the simplifications rule. Non-advanced approaches
institutions that elect to wait to adopt the simplifications rule on
April 1, 2020, and all advanced approaches institutions would complete
the column for the set of calculations that does not reflect the
effects of the simplifications rule (i.e., that reflects the capital
calculation in effect for all institutions before this revision).
Beginning with the June 30, 2020, report date, all non-advanced
approaches institutions that file the FFIEC 031 Call Report would
complete the column for the set of calculations that incorporates the
effects of the simplifications rule; all advanced approaches
institutions that file this Call Report would complete the column that
does not reflect the effects of the simplifications rule.
Because advanced approaches institutions currently are not
permitted to file the FFIEC 051 Call Report and would not be permitted
to file the FFIEC 041 Call Report, the FFIEC 041 and FFIEC 051 Call
Reports would include a single column for the capital calculation in
Schedule RC-R, Part I, that would be revised effective March 31, 2020,
to incorporate the effects of the simplifications rule. For the March
31, 2020, report date, non-advanced approaches institutions that file
the FFIEC 041 or FFIEC 051 Call Report and elect to adopt the
simplifications rule on January 1, 2020, would complete the capital
calculation column in Schedule RC-R, Part I, as revised for the
simplifications rule. The agencies propose to provide instructions for
non-advanced approaches institutions that file the FFIEC 041 or FFIEC
051 Call Report that elect to wait to adopt the simplifications rule on
April 1, 2020, on how to complete Schedule RC-R, including the capital
calculation column, for the March 31, 2020, report date in accordance
with the capital rule in effect before the simplifications rule's
revised effective date of January 1, 2020. Beginning with the June 30,
2020, report date, all non-advanced approaches institutions that file
the FFIEC 041 or FFIEC 051 Call Report would complete Schedule RC-R as
revised for the simplifications rule.
In connection with proposing that all advanced approaches
institutions file the FFIEC 031 Call Report, the agencies propose to
remove certain items from the FFIEC 041 Call Report that apply only to
advanced approaches institutions. Thus, for Schedule RC-R, Part I, in
the FFIEC 041 Call Report, the agencies propose to remove items 30.b,
32.b, 34.b, 35.b, 40.b, 41 through 43 (Column B only), 45.a, 45.b, and
46.b. The agencies propose to renumber items 30.a, 32.a, 34.a, 35.a,
40.a, and 46.a as items 30, 32, 34, 35, 40, and 46, respectively. When
the FFIEC 051 Call Report was created in 2016 (and implemented as of
March 31, 2017), Schedule RC-R, Part I, was revised to remove the items
and references applicable only to advanced approaches institutions.
Thus, as a result, Schedule RC-R, Part I, as it is proposed to be
revised in the FFIEC 041 would be the same as the existing Schedule RC-
R, Part I, in the FFIEC 051.
In the simplifications rule, the agencies increased the thresholds
for including MSAs, temporary difference DTAs that could not be
realized through net operating loss carrybacks (temporary difference
DTAs),\10\ and investments in the capital of unconsolidated financial
institutions for non-advanced approaches institutions. In addition, the
agencies revised the capital calculation for minority interests
included in the various capital categories for non-advanced approaches
institutions and to the calculation of the capital conservation buffer.
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\10\ The agencies note that An Act to provide for reconciliation
pursuant to titles II and V of the concurrent resolution on the
budget for fiscal year 2018, Public Law 115-97 (originally
introduced as the Tax Cuts and Jobs Act), enacted December 22, 2017,
eliminated the concept of net operating loss carrybacks for U.S.
federal income tax purposes, although the concept may still exist in
particular jurisdictions for state or foreign income tax purposes.
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The current regulatory capital calculations in Call Report Schedule
RC-R, which do not yet reflect the revisions contained in the
simplifications rule, require that an institution's capital cannot
include MSAs, certain temporary difference DTAs, and significant
investments in the common stock of unconsolidated financial
institutions in an amount greater than 10 percent of CET1 capital, on
an individual basis, and those three data items combined cannot
comprise more than 15 percent of CET1 capital. When the reporting of
regulatory capital calculations by non-advanced approaches institutions
in accordance with the simplifications rule takes effect, this
calculation would be revised in Schedule RC-R, Part I, to require that
only MSAs or temporary difference DTAs in an amount greater than 25
percent of CET1 capital, on an individual basis, could not be included
in a non-advanced approaches institution's capital. The 15 percent
aggregate limit would be removed. In addition, the simplifications rule
will combine the current three categories of investments in financial
institutions (non-significant investments in the capital of
unconsolidated financial institutions, significant investments in the
capital of unconsolidated financial institutions that are in the form
of common stock, and significant investments in the capital of
unconsolidated financial institutions that are not in the form of
common stock) into a single category, investments in the capital of
unconsolidated financial institutions, and will apply a limit of 25
percent of CET1 capital on the amount of these investments that can be
included in capital. Any investments in excess of the 25 percent limit
would be deducted from capital using the corresponding deduction
approach.
Consistent with the current capital rule, an institution must risk
weight MSAs, temporary difference DTAs, and investments in the capital
of unconsolidated financial institutions that are not deducted. The
agencies propose revisions to allow institutions to enter values into
the Column K--250% risk weight on Schedule RC-R, Part II, in the FFIEC
051 Call Report, which is currently shaded out, and remove footnote two
on the second page of Schedule RC-R, Part II, and the corresponding
footnote on subsequent pages of Schedule RC-R, Part II, in all three
versions of the Call Reports
[[Page 53232]]
effective as of the March 31, 2020, report date to accommodate the
simplifications rule revisions to the risk weight for MSAs and
temporary difference DTAs. Consistent with the simplifications rule,
non-advanced approaches institutions will not be required to
differentiate among categories of investments in the capital of
unconsolidated financial institutions. The risk weight for such equity
exposures generally will be 100 percent, provided the exposures qualify
for this risk weight.\11\ For non-advanced approaches institutions, the
simplifications rule eliminates the exclusion of significant
investments in the capital of unconsolidated financial institutions in
the form of common stock from being eligible for a 100 percent risk
weight.\12\ The application of the 100 percent risk weight (i) requires
a banking organization to follow an enumerated process for calculating
adjusted carrying value and (ii) mandates the equity exposures that
must be included in determining whether the threshold has been reached.
Equity exposures that do not qualify for a preferential risk weight
will generally receive risk weights of either 300 percent or 400
percent, depending on whether the equity exposures are publicly traded.
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\11\ 12 CFR 3.52 and .53 (OCC); 12 CFR 217.52 and .53 (Board);
12 CFR 324.52 and .53 (FDIC). Note that for purposes of calculating
the 10 percent nonsignificant equity bucket, the capital rule
excludes equity exposures that are assigned a risk weight of zero
percent and 20 percent, and community development equity exposures
and the effective portion of hedge pairs, both of which are assigned
a 100 percent risk weight. In addition, the 10 percent non-
significant bucket excludes equity exposures to an investment firm
that would not meet the definition of traditional securitization
were it not for the application of criterion 8 of the definition of
traditional securitization, and has greater than immaterial
leverage.
\12\ Equity exposures that exceed, in the aggregate, 10 percent
of a non-advanced approaches banking organization's total capital
would then be assigned a risk weight based upon the approaches
available in sections 52 and 53 of the capital rule. 12 CFR 3.52 and
.53 (OCC); 12 CFR 217.52 and .53 (Board); 12 CFR 324.52 and .53
(FDIC).
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In order to implement these regulatory capital changes from a
regulatory reporting perspective, the agencies propose to make a number
of revisions to Schedule RC-R, Part I, for non-advanced approaches
institutions effective March 31, 2020. Specifically, in Schedule RC-R,
Part I, in the FFIEC 041 and FFIEC 051 Call Reports, the agencies
propose to remove item 11 and modify item 13 to reflect the
consolidation of all investments in unconsolidated financial
institutions into a single category and apply a single 25 percent of
CET1 capital limit to these investments. The agencies propose to modify
items 14 and 15 to reflect the 25 percent of CET1 capital limit for
MSAs and certain temporary difference DTAs, respectively. The agencies
also propose to remove item 16, which applies to the aggregate 15
percent limitation that was removed from the capital rule for non-
advanced approaches institutions. In the FFIEC 031 Call Report, the
agencies propose to create two columns for existing items 11 through
19. Column A would be reported by non-advanced approaches institutions
that elect to adopt the simplifications rule on January 1, 2020, in the
March 2020 Call Report and by all non-advanced approaches institutions
beginning in the June 2020 Call Report using the definitions under the
simplifications rule. Column A would not include items 11 or 16, and
items 13 through 15 would be designated as items 13.a through 15.a to
reflect the new calculation methodology. Column B would be reported by
advanced approaches institutions and by non-advanced approaches
institutions that elect to wait to adopt the simplifications rule on
April 1,2020, in the March 2020 Call Report and only by advanced
approaches institutions beginning in the June 2020 Call Report using
the existing definitions. Existing items 13 through 15 would be
designated as items 13.b through 15.b to reflect continued use of the
existing calculation methodology.
The agencies are not proposing any changes to the form to
incorporate the minority interest revisions. However, the agencies are
proposing to modify the instructions for the existing minority interest
items in all versions of the Call Report to reflect the ability of non-
advanced approaches institutions to use the revised method under the
simplifications rule to calculate minority interest in existing items
4, 22, and 29 (CET1, additional tier 1, and tier 2 minority interest,
respectively).
B. Community Bank Leverage Ratio Rule
1. Background
In February 2019, the agencies proposed a rule to provide a
simplified alternative measure of capital adequacy, the community bank
leverage ratio (CBLR), for qualifying community banking organizations
with less than $10 billion in total consolidated assets (CBLR proposed
rule),\13\ consistent with section 201 of the Economic Growth,
Regulatory Relief, and Consumer Protection Act (EGRRCPA).\14\ In
February 2019, the FDIC published a proposed rule to amend the deposit
insurance assessment regulations to incorporate the community bank
leverage ratio framework (CBLR framework) into the deposit insurance
assessment system (CBLR assessments proposed rule).\15\ The agencies
then requested comment in April 2019 on proposed revisions to the Call
Report to implement the CBLR proposed rule and the CBLR assessments
proposed rule.\16\
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\13\ 84 FR 3062 (February 8, 2019).
\14\ Public Law 115-174, 132 Stat. 1296 (2018).
\15\ 84 FR 5380 (February 21, 2019).
\16\ 84 FR 16560 (April 19, 2019).
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However, the FDIC and the OCC have recently approved,\17\ and the
Board is considering, a final rule (planned CBLR final rule) that
contains significant revisions to the calculation methodology relative
to the CBLR proposed rule. Therefore, the agencies are proposing a
revised version of community bank leverage ratio reporting in the Call
Report to reflect the changes in the planned CBLR final rule, which
replaces the previously proposed community bank leverage ratio
reporting that had been designed to implement the CBLR proposed rule.
In addition, the FDIC has recently approved a final rule regarding the
application of the CBLR framework to the deposit insurance assessment
system (CBLR assessments final rule).\18\ Because of the features of
the revised calculation methodology in the planned CBLR final rule
described below, the agencies are not proceeding with the previously
proposed revisions to Call Report Schedule RC-O, ``Other Data for
Deposit Insurance Assessments,'' to implement the CBLR assessments
proposed rule \19\ and no revisions to Schedule RC-O are being proposed
in connection with the CBLR assessments final rule. Certain
clarifications would be made to the Schedule RC-O instructions to
address the application of the CBLR framework to the FDIC's deposit
insurance assessment system in accordance with the CBLR assessments
final rule.
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\17\ See FDIC Press Release 80-2019, dated September 17, 2019.
\18\ See FDIC Press Release 80-2019, dated September 17, 2019.
\19\ See 84 FR 16565-16566 (April 19, 2019).
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Under the planned CBLR final rule, banking organizations that have
less than $10 billion in total consolidated assets, meet risk-based
qualifying criteria, and have a leverage ratio of greater than 9
percent will be eligible to opt into the CBLR framework. A banking
organization that opts into the CBLR framework, maintains a leverage
ratio of greater than 9 percent, and meets the other qualifying
criteria will not be subject to other risk-based and leverage capital
requirements and, in the case of an insured depository
[[Page 53233]]
institution (IDI), would be considered to have met the well capitalized
capital ratio requirements for purposes of the agencies' prompt
corrective action framework.
Under the planned CBLR final rule, a bank or savings association
(bank) that opts into the CBLR framework (CBLR bank) may opt out of the
CBLR framework at any time, without restriction, by reverting to the
generally applicable capital requirements in the agencies' capital rule
\20\ and reporting its regulatory capital information in Call Report
Schedule RC-R, ``Regulatory Capital,'' Parts I and II, at the time of
opting out.
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\20\ 12 CFR part 3 (OCC); 12 CFR part 217 (Board); 12 CFR part
324 (FDIC).
---------------------------------------------------------------------------
As described in the planned CBLR final rule, a banking organization
that no longer meets the qualifying criteria for the CBLR framework
will be required within two consecutive calendar quarters (grace
period) either to once again satisfy the qualifying criteria or
demonstrate compliance with the generally applicable capital
requirements. During the grace period, the bank would continue to be
treated as a CBLR bank and would be required to report its leverage
ratio and related components in Call Report Schedule RC-R, Part I, in
the manner described in this notice.\21\ A CBLR bank that ceases to
meet the qualifying criteria as a result of a business combination
(e.g., a merger) would receive no grace period, and would immediately
become subject to the generally applicable capital requirements.
Similarly, a CBLR bank that fails to maintain a leverage ratio greater
than 8 percent would not be permitted to use the grace period and would
immediately become subject to the generally applicable capital
requirements.
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\21\ For example, if the electing banking organization no longer
meets one of the qualifying criteria as of February 15, and still
does not meet the criteria as of the end of that quarter, the grace
period for such a banking organization will begin as of the end of
the quarter ending March 31. The banking organization may continue
to use the community bank leverage ratio framework as of June 30,
but will need to comply fully with the generally applicable rule
(including the associated reporting requirements) as of September
30, unless the banking organization once again meets all qualifying
criteria of the community bank leverage ratio framework, including a
leverage ratio of greater than 9 percent, by that date.
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2. Proposed Revisions to Call Report Schedule RC-R
In this notice, the agencies are proposing reporting revisions to
the Call Reports for banks that qualify for and opt into the CBLR
framework, consistent with the planned CBLR final rule. The reporting
changes to the Call Reports proposed in this notice would take effect
in the same quarter as the effective date of the planned final rule
adopting the CBLR framework.
The agencies originally proposed to incorporate all the community
bank leverage ratio items into a separate version of Schedule RC-R.
However, after considering the substantial changes made in the planned
CBLR final rule, the agencies now propose to incorporate all the
revisions related to the community bank leverage ratio into the
existing Schedule RC-R, Part I, for all versions of the Call Report.
As provided in the planned CBLR final rule, the numerator of the
community bank leverage ratio will be tier 1 capital, which is
currently reported in Schedule RC-R, Part I, item 26. Therefore, the
agencies are not proposing any changes related to the numerator of the
community bank leverage ratio.
As provided in the planned CBLR final rule, the denominator of the
community bank leverage ratio will be average total consolidated
assets. Specifically, average total consolidated assets would be
calculated in accordance with the existing reporting instructions for
Schedule RC-R, Part I, items 36 through 39. The agencies are not
proposing any substantive changes related to the denominator of the
community bank leverage ratio. However, the agencies are proposing to
move existing items 36 through 39 of Schedule RC-R, Part I, and
renumber them as items 27 through 30 of Schedule RC-R, Part I, to
consolidate all of the community-bank-leverage-ratio-related capital
items earlier in Schedule RC-R, Part I.
As provided in the planned CBLR final rule, a CBLR bank will
calculate its community bank leverage ratio by dividing tier 1 capital
by average total consolidated assets (as adjusted), and the community
bank leverage ratio would be reported as a percentage, rounded to four
decimal places. Since this calculation is essentially identical to the
existing calculation of the tier 1 leverage ratio in Schedule RC-R,
Part I, item 44, the agencies are not proposing a separate item for the
community bank leverage ratio in Schedule RC-R, Part I. Instead, the
agencies propose to move the tier 1 leverage ratio from item 44 of Part
I and renumber it as item 31, and rename the item the Leverage Ratio,
as this ratio would apply to all institutions (as the community bank
leverage ratio for qualifying institutions or the tier 1 leverage ratio
for all other institutions).
As provided in the planned CBLR final rule, a CBLR bank will need
to satisfy certain qualifying criteria in order to be eligible to opt
into the CBLR framework. The proposed items identified below would
collect information necessary to ensure that a bank continuously meets
the qualifying criteria for using the CBLR framework.
Specifically, a CBLR bank is a bank that is not an advanced
approaches institution and meets the following qualifying criteria:
A leverage ratio of greater than 9 percent;
Total consolidated assets of less than $10 billion;
Total trading assets and trading liabilities of 5 percent
or less of total consolidated assets; and
Total off-balance sheet exposures (excluding derivatives
other than sold credit derivatives and unconditionally cancelable
commitments) of 25 percent or less of total consolidated assets.\22\
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\22\ Under the planned CBLR final rule, the agencies have
reserved the authority to disallow the use of the CBLR framework by
a depository institution or depository institution holding company
based on the risk profile of the banking organization. This
authority is reserved under the general reservation of authority
included in the capital rule, in which the CBLR framework would be
codified. See 12 CFR 3.1(d) (OCC); 12 CFR 217.1(d) (Board); 12 CFR
324.1(d) (FDIC). In addition, for purposes of the capital rule and
section 201 of the EGRRCPA, the agencies have reserved the authority
to take action under other provisions of law, including action to
address unsafe or unsound practices or conditions, deficient capital
levels, or violations of law or regulation. See 12 CFR 3.1(b) (OCC);
12 CFR 217.1(b) (Board); 12 CFR 324.1(b) (FDIC).
---------------------------------------------------------------------------
Accordingly, the agencies propose collecting the items described
below for community bank leverage ratio reporting purposes.
In proposed item 32 of Schedule RC-R, Part I, a CBLR bank would
report total assets, as reported in Call Report Schedule RC, item 12.
In proposed item 33, a CBLR bank would report the sum of trading
assets from Schedule RC, item 5, and trading liabilities from Schedule
RC, item 15, in Column A. The bank would also report that sum divided
by total assets from Schedule RC, item 12, and expressed as a
percentage in Column B. As provided in the planned CBLR final rule,
trading assets and trading liabilities would be added together, not
netted, for purposes of this calculation. Also as discussed in the
planned CBLR final rule, a bank would not meet the definition of a
qualifying community banking organization for purposes of the CBLR
framework if the percentage reported in Column B is greater than 5
percent.
In proposed items 34.a through 34.d, a CBLR bank would report
information related to commitments, other off-balance sheet exposures,
and sold credit derivatives.
[[Page 53234]]
In proposed item 34.a, a CBLR bank would report the unused portion
of conditionally cancelable commitments. This amount would be the
amount of all unused commitments less the amount of unconditionally
cancelable commitments, as discussed in the planned CBLR final rule and
defined in the agencies' capital rule.\23\ This item would be
calculated consistent with the sum of Schedule RC-R, Part II, items
18.a and 18.b, Column A.
---------------------------------------------------------------------------
\23\ See definition of ``unconditionally cancellable'' in 12 CFR
3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR 324.2 (FDIC).
---------------------------------------------------------------------------
In proposed item 34.b, a CBLR bank would report total securities
lent and borrowed, which would be the sum of Schedule RC-L, items 6.a
and 6.b.
In proposed item 34.c, a CBLR bank would report the sum of certain
other off-balance sheet exposures and sold credit derivatives.
Specifically, a CBLR bank would report the sum of self-liquidating,
trade-related contingent items that arise from the movement of goods;
transaction-related contingent items (performance bonds, bid bonds,
warranties, and performance standby letters of credit); sold credit
protection in the form of guarantees and credit derivatives; credit-
enhancing representations and warranties; financial standby letters of
credit; forward agreements that are not derivative contracts; and off-
balance sheet securitizations. A CBLR bank would not include
derivatives that are not sold credit derivatives, such as foreign
exchange swaps and interest rate swaps, in proposed item 34.c.
In proposed item 34.d, a CBLR bank would report the sum of proposed
items 34.a through 34.c in Column A. The bank would also report that
sum divided by total assets from Schedule RC, item 12, and expressed as
a percentage in Column B. As discussed in the planned CBLR final rule,
a bank would not be eligible to opt into the CBLR framework if this
percentage is greater than 25 percent.
In proposed item 35, a CBLR bank would report the total of
unconditionally cancellable commitments, which would be calculated
consistent with the instructions for existing Schedule RC-R, Part II,
item 19. This item is not used specifically to calculate a bank's
eligibility for the CBLR framework. However, the agencies are
collecting this information to identify any bank using the CBLR
framework that may have significant or excessive concentrations in
unconditionally cancellable commitments that would warrant the
agencies' use of the reservation of authority in their capital rule to
direct an otherwise-eligible CBLR bank to report its regulatory capital
using the generally applicable capital requirements.\24\
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\24\ Other factors also may lead the agencies to determine that
the risk profile of an otherwise-eligible CBLR bank would warrant
the use of the reservation of authority.
---------------------------------------------------------------------------
In proposed item 36, a CBLR bank would report the amount of
investments in the capital instruments of an unconsolidated financial
institution that would qualify as tier 2 capital. Since the CBLR
framework does not have a total capital requirement, a CBLR bank is
neither required to calculate tier 2 capital nor make any deductions
that would be taken from tier 2 capital. Therefore, if a CBLR bank has
investments in the capital instruments of an unconsolidated financial
institution that would qualify as tier 2 capital of the CBLR bank under
the generally applicable capital requirements (tier 2 qualifying
instruments), and the CBLR bank's total investments in the capital of
unconsolidated financial institutions exceed 25 percent of its CET1
capital, the CBLR bank is not required to deduct the tier 2 qualifying
instruments. A CBLR bank is required to make a deduction from CET1
capital or tier 1 capital only if the sum of its investments in the
capital of an unconsolidated financial institution is in a form that
would qualify as CET1 capital or tier 1 capital instruments of the CBLR
bank and the sum exceeds the 25 percent CET1 threshold. The agencies
believe it is important to continue collecting information on the
amount of investments in these capital instruments as excessive
investments similarly could warrant the agencies' use of their
reservation of authority.
In proposed item 37, a CBLR bank would be required to report its
allocated transfer risk reserve (ATRR), as currently calculated and
reported in Schedule RC-R, Part II, item 30. In proposed items 38.a
through 38.c, a CBLR bank that has adopted Accounting Standards Update
(ASU) No. 2016-13 on credit losses must report the amount of any
allowances for credit losses on purchased credit-deteriorated loans and
leases held for investment, held-to-maturity debt securities, and other
financial assets measured at amortized cost, as currently calculated
and reported in Schedule RC-R, Part II, Memorandum items 4.a through
4.c. The amount of the ATRR, if any, is necessary to calculate capital
and surplus and corresponding limits in a number of the OCC's
regulations, including investment securities limits (12 CFR part 1) and
lending limits (12 CFR part 32). After an institution adopts ASU 2016-
13, allowances for credit losses on purchased credit-deteriorated
assets similarly would affect the calculation of these limits. While
these limits apply directly to institutions supervised by the OCC, a
number of federal or state laws may apply the OCC's calculation of
certain limits to state-chartered institutions supervised by the FDIC
or the Board. Therefore, the agencies are proposing to retain this
information for all CBLR banks. As CBLR banks would not complete
Schedule RC-R, Part II, this information would otherwise not be readily
available for the agencies to calculate the relevant regulatory limits
for these institutions.\25\
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\25\ Institutions that are not CBLR banks would not complete
proposed items 37 and 38.a through 38.c, but would continue to
report any ATRR and any allowances for credit losses on purchased
credit-deteriorated loans and leases held for investment, held-to-
maturity debt securities, and other financial assets measured at
amortized cost in Schedule RC-R, Part II.
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Because a CBLR bank would not be subject to the generally
applicable capital requirements, a CBLR bank would not need to complete
any of the items in Schedule RC-R, Part I, after proposed item 38, nor
would the bank need to complete Schedule RC-R, Part II, Risk-Weighted
Assets.
In connection with moving the leverage ratio calculations and
inserting items for the CBLR qualifying criteria in Schedule RC-R, Part
I, existing items 27 through 35 of Schedule RC-R, Part I, will be
renumbered as items 39 through 47. Existing items 40 through 43 will be
renumbered as items 48 through 51, while existing items 46 through 48
will be renumbered as items 52 through 54. For advanced approaches
institutions filing the FFIEC 031 Call Report, existing items 45.a and
45.b for total leverage exposure and the supplementary leverage ratio,
respectively, will be renumbered as items 55.a and 55.b.
A CBLR bank would indicate that it has elected to apply the CBLR
framework by completing Schedule RC-R, Part I, items 32 through 38.
Institutions not subject to the CBLR framework would be required to
report all data items in Schedule RC-R, Part I, except for items 32
through 38.
3. Other Proposed Call Report Revisions Related to the CBLR
While not specifically part of the planned CBLR final rule, the
agencies currently collect information in Call Report Schedule RC-C,
Part I, ``Loans
[[Page 53235]]
and Leases,'' Memorandum item 13, from institutions that have a
significant amount of construction, land development, and other land
loans with interest reserves in relation to their total regulatory
capital as reported as of the previous calendar year-end report date.
At present, total regulatory capital is defined as total capital
reported on Schedule RC-R, Part I, item 35 (FFIEC 051) or item 35.a
(FFIEC 031 or FFIEC 041). While CBLR banks would no longer report their
total capital in Schedule RC-R, Part I, the agencies believe it is
still important to collect this information from CBLR banks that have a
significant amount of construction, land development, and other land
loans with interest reserves. Therefore, effective March 31, 2021,\26\
the agencies propose to revise the reporting threshold for Schedule RC-
C, Part I, Memorandum item 13, for all institutions to reference the
sum of tier 1 capital as reported in Schedule RC-R, Part I, item 26,
plus the allowance for loan and lease losses or the allowance for
credit losses on loan and leases, as applicable, as reported in
Schedule RC, item 4.c.
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\26\ For report dates during 2020, the reporting threshold for
Schedule RC-C, Part I, Memorandum item 13, would be the total
capital an institution reported in Schedule RC-R, Part I, as of
December 31, 2019, which will predate the initial reporting under
the CBLR framework in Schedule RC-R. The first year-end report date
under the CBLR framework would be December 31, 2020, which would be
the report date to which a CBLR bank would refer in order to
determine whether it would need to complete Schedule RC-C, Part I,
Memorandum item 13, as of each quarter-end report date during 2021.
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C. Proposed Tailoring Rules
1. Background
On December 21, 2018, the agencies published a notice of proposed
rulemaking (NPR) proposing to revise the criteria for determining the
applicability of requirements under the regulatory capital rule, the
liquidity coverage ratio rule, and the proposed net stable funding
ratio rule for large U.S. banking organizations (domestic interagency
tailoring NPR).\27\ The proposal would establish four risk-based
categories and apply tailored capital and liquidity requirements for
banking organizations subject to each category.
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\27\ 83 FR 66024 (December 21, 2018).
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On May 24, 2019, the agencies published an NPR that would revise
the criteria for determining the applicable regulatory capital
requirements for certain U.S. intermediate holding companies of foreign
banking organizations and their depository institution subsidiaries,
and the application of standardized liquidity requirements with respect
to the U.S. operations of large foreign banking organizations and
certain of their depository institution subsidiaries, each according to
three of the four risk-based categories proposed for U.S. banking
organizations (foreign interagency tailoring NPR).\28\ Thus, the
proposal is similar to the domestic interagency tailoring NPR. The
foreign interagency tailoring NPR also proposed technical amendments to
certain provisions of the domestic interagency tailoring NPR.
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\28\ 84 FR 24296 (May 24, 2019).
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Under the proposed approach, the most stringent set of standards
(Category I) would apply to U.S. global systemically important banks
(GSIBs). The second set of standards (Category II) would apply to
banking organizations that are very large or have significant
international activity. Like Category I, this category would generally
include standards that are based on standards that reflect agreements
reached by the Basel Committee on Banking Supervision. The third set of
standards (Category III) would apply to banking organizations with $250
billion or more in total consolidated assets that do not meet the
criteria for Category I or II. The third set of standards would also
apply to banking organizations with total consolidated assets of $100
billion or more, but less than $250 billion, that meet or exceed other
specified risk-based indicators. The fourth set of standards (Category
IV) would apply to banking organizations with total consolidated assets
of $100 billion or more that do not meet the thresholds for one of the
other categories.
The domestic interagency tailoring and foreign interagency
tailoring NPRs also describe the capital and liquidity requirements
that would apply for institutions subject to Category I, II, III, or IV
capital standards. Based on the proposed capital and liquidity
requirements that would apply to institutions subject to Category I,
II, III, or IV capital standards in the domestic interagency tailoring
and foreign interagency tailoring NPRs, the agencies are proposing to
amend certain regulatory report forms to clarify the reporting
requirements for those institutions that would be subject to those
proposed rules. Specifically, the agencies are proposing changes to
Call Report Schedule RC-R, Part I, Regulatory Capital Components and
Ratios, and FFIEC 101 Schedule A, Advanced Approaches Regulatory
Capital, to provide clarification for institutions subject to Category
III capital standards.\29\ If modifications are made to the proposed
tailoring rules when the rules are adopted in final form, the agencies
would modify the Call Report and FFIEC 101 proposals to incorporate
such changes. These changes would generally align with the Board's
proposed amendments to FR Y-9C, Schedule HC-R, Part I, issued in
conjunction with the Board's domestic tailoring and foreign tailoring
proposals.\30\
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\29\ The agencies do not believe reporting form or instructional
clarifications are needed to reflect capital requirements that would
apply to institutions subject to Category I, II, or IV capital
standards under the domestic interagency tailoring and foreign
interagency tailoring NPRs.
\30\ See 84 FR 22009 (May 15, 2019).
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In addition, the agencies are proposing that all institutions
subject to Category I, II, or III capital standards would be required
to file the FFIEC 031 Call Report. While the agencies proposed to
require all advanced approaches institutions to file the FFIEC 031 Call
Report in connection with the simplifications rule, the tailoring rules
would narrow the scope of institutions calculating risk-weighted assets
under the advanced approaches. The agencies expect this scope revision
to have little, if any, impact on current institutions, as all
institutions with total consolidated assets of $100 billion or more or
with foreign offices already are required to file the FFIEC 031, which
generally aligns with the standards for Category I, II, and III
institutions.\31\ Also, modifying the scope of the Call Report in this
manner would enable the agencies to streamline Schedule RC-R, Part I,
of the FFIEC 041 report by removing data items that apply only to the
limited number of current advanced approaches institutions currently
eligible to file the FFIEC 041 report and to any future institutions
that would, absent this change in scope, be eligible to file the FFIEC
041 report.
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\31\ Institutions that are subsidiaries of institutions subject
to Category I, II, or III capital standards also are considered
Category I, II, or III institutions under the domestic interagency
tailoring and foreign interagency tailoring NPRs, and would be
treated similarly for this change in reporting scope.
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2. Proposed Revisions to Call Report Schedule RC-R, Part I
In order to implement the clarifications for institutions subject
to Category III capital standards, as discussed above the agencies
propose to require all Category III institutions to file the FFIEC 031
Call Report and to revise the caption for Schedule RC-R, Part I, item
45, ``Advanced approaches institutions only: Supplementary leverage
ratio information,'' on the FFIEC 031 Call Report. Specifically, the
[[Page 53236]]
agencies propose to clarify that item 45 (proposed to be renumbered as
item 55) applies to ``advanced approaches and Category III
institutions'' on the FFIEC 031 report form. Item 45 would be removed
from the FFIEC 041 report form. The instructions for Schedule RC-R,
Part I, item 45 (proposed to be renumbered as item 55), in the FFIEC
031-FFIEC 041 instruction book also would be revised in the same
manner. The general instructions for Schedule RC-R, Part I, in the
FFIEC 031-FFIEC 041 instruction book also would be clarified to
indicate that Category III institutions are not required to calculate
risk-weighted assets according to the advanced approaches rule, but are
subject to the supplementary leverage ratio and countercyclical capital
buffer.
3. Proposed Revisions to the FFIEC 101
To implement the clarification for institutions subject to Category
III capital standards, the agencies propose to revise the instructions
for the scope of the FFIEC 101. Specifically, the instructions would be
revised to clarify that top-tier Category III bank holding companies,
savings and loan holding companies, and insured depository
institutions, and all U.S. intermediate holding companies, must
complete FFIEC 101 Schedule A, SLR Tables 1 and 2, only.\32\ All
Category IV institutions would not complete or file any part of the
FFIEC 101.
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\32\ Any Category III banking organization that is a
consolidated subsidiary of a top-tier Category III bank holding
company, savings and loan holding company, or insured depository
institution would not complete or file any part of the FFIEC 101.
Those subsidiary banking organizations would report SLR data on
Schedule RC-R of the Call Report.
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D. Proposed Total Loss Absorbing Capacity Holdings Rule
1. Background
On April 8, 2019, the agencies published an NPR that would address
an advanced approaches banking organization's regulatory capital
treatment of an investment in unsecured debt instruments issued by
foreign or U.S. global systemically important banks (GSIBs) for the
purposes of meeting minimum total loss absorbing capacity (TLAC) and,
where applicable, long-term debt (LTD) requirements, or liabilities
issued by GSIBs that are pari passu or subordinated to such debt
instruments (TLAC Holdings NPR).\33\ Under the TLAC Holdings NPR,
investments by an advanced approaches banking organization in certain
unsecured debt instruments generally would be subject to deduction from
the advanced approaches banking organization's regulatory capital if
such investments exceed certain thresholds. The Board also proposed to
require that banking organizations subject to minimum TLAC and LTD
requirements under Board regulations publicly disclose their TLAC and
LTD issuances in a manner described in the TLAC Holdings NPR.
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\33\ 84 FR 13814 (April 8, 2019).
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The agencies are proposing changes to Call Report Schedule RC-R,
Part I, Regulatory Capital Components and Ratios, and FFIEC 101
Schedule A, Advanced Approaches Regulatory Capital, to implement the
changes proposed to the agencies' capital rule. If modifications are
made to the proposed TLAC holdings rule when it is adopted in final
form, the agencies would modify the Call Report and FFIEC 101 proposals
to incorporate such changes.
2. Proposed Revisions to Call Report Schedule RC-R, Part I
Under the TLAC Holdings NPR, advanced approaches banking
organizations would report the total amount of deductions related to
investments in own CET1, additional tier 1, and tier 2 capital
instruments; investments in own covered debt instruments, if
applicable; reciprocal cross holdings; non-significant investments in
the capital and covered debt instruments of unconsolidated financial
institutions that exceed certain thresholds; certain investments in
excluded covered debt instruments, as applicable; and significant
investments in the capital and covered debt instruments of
unconsolidated financial institutions. Any deductions related to
covered debt instruments and excluded covered debt instruments
(together, TLAC debt holdings) would be applied at the level of tier 2
capital under the agencies' existing regulatory capital rule. Any
required deduction would be made using the ``corresponding deduction
approach,'' by which an advanced approaches banking organization would
deduct TLAC debt holdings first from tier 2 capital and, if it had
insufficient tier 2 capital to make the full requisite deduction,
deduct the remaining amount from additional tier 1 capital and then, if
necessary, from CET1 capital.
In order to implement these proposed changes, the agencies propose
to make a number of revisions to the instructions for Schedule RC-R,
Part I, that would be applicable to advanced approaches banking
organizations and would be included in the FFIEC 031-FFIEC 041
instruction book. Specifically, the agencies propose to revise the
instructions for items 11, 17, 24, and 33 (proposed to be renumbered as
item 45) to effectuate the deductions from regulatory capital for
advanced approaches banking organizations related to investments in
covered debt instruments and excluded covered debt instruments. These
changes would generally align with the Board's proposed amendments to
FR Y-9C, Schedule HC-R, Part I, issued in conjunction with the TLAC
Holdings NPR.\34\
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\34\ See 84 FR 13823-13824 (April 8, 2019).
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3. Proposed Revisions to Call Report Schedule RC-R, Part II
The agencies also are proposing to revise the instructions for
Schedule RC-R, Part II, that would be applicable to advanced approaches
banking organizations and would be included in the FFIEC 031-FFIEC 041
instruction book. Specifically, the agencies propose to revise the
instructions for items 2.a, 2.b, 7, and 8 to incorporate investments in
covered debt instruments and excluded debt instruments, as applicable,
by advanced approaches banking organizations in their calculation of
risk-weighted assets. These changes would generally align with the
Board's proposed amendments to FR Y-9C, Schedule HC-R, Part II, issued
in conjunction with the TLAC Holdings NPR.
4. Proposed Revisions to FFIEC 101 Schedule A
i. Deductions From Regulatory Capital
The agencies propose to make a number of revisions to the
instructions for FFIEC 101 Schedule A and add a new data item to this
schedule. Specifically, the agencies propose to revise the instructions
for existing items 52 through 54 and add a new data item to effectuate
any deductions from regulatory capital for advanced approaches banking
organizations for investments in excluded covered debt instruments, as
described in Section II.D.2. above. Existing item 56, ``Other
deductions from tier 2 capital,'' would be renumbered and recaptioned
as item 56.b, ``All other deductions from tier 2 capital.'' The new
item would be inserted as item 56.a, ``Investments in excluded covered
debt instruments,'' which would be applicable only to global
systemically important bank holding companies (GSIBs) and subsidiaries
of GSIBs.
ii. LTD and TLAC Amounts, Ratios, and Buffer
In conjunction with the issuance of the TLAC Holdings NPR, the
Board also proposed revisions to the FR Y-9C,
[[Page 53237]]
Schedule HC-R, Part I, that would collect information from U.S. GSIBs
and the intermediate holding companies of foreign GSIBs. Specifically,
the proposed items would collect information on these holding
companies' LTD and TLAC amounts, LTD and TLAC ratios, and TLAC buffer.
Since the minimum LTD and TLAC requirements and TLAC buffer are
only applied at the holding company-level, the agencies are not
proposing to amend the FFIEC 101 to include this information.
Collecting this information in the FFIEC 101 would be a duplicative
reporting requirement and would only be applicable to a subset of FFIEC
101 filers. However, the agencies are interested in public feedback on
this issue, especially if commenters believe including these items
would enhance or simplify public disclosure.
E. Proposed Revisions to the Supplementary Leverage Ratio for Certain
Central Bank Deposits of Custodial Banks
1. Background
On April 30, 2019, the agencies published an NPR that would
implement section 402 of the EGRRCPA (section 402). Section 402 directs
the agencies to amend the capital rule \35\ to exclude from the SLR
certain central bank deposits of custodial banks. Section 402 defines a
custodial bank as any depository institution holding company
predominantly engaged in custody, safekeeping, and asset servicing
activities, including any IDI subsidiary of such a holding company.\36\
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\35\ See 12 CFR part 3 (OCC); 12 CFR part 217 (Board); 12 CFR
part 324 (FDIC).
\36\ See generally Public Law 115-174, sec. 402.
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Under the proposed rulemaking, a depository institution holding
company would be considered predominantly engaged in custody,
safekeeping, and asset servicing activities if the U.S. top-tier
depository institution holding company in the organization has a ratio
of assets under custody-to-total assets of at least 30:1. The proposal
would define such a depository institution holding company, together
with any subsidiary depository institution, as a ``custodial banking
organization.'' \37\ Under the proposal, a custodial banking
organization would exclude deposits placed at a ``qualifying central
bank'' from the denominator of the SLR. For purposes of the proposal, a
qualifying central bank would mean a Federal Reserve Bank, the European
Central Bank, or a central bank of a member country of the Organisation
for Economic Co-operation and Development (OECD) \38\ if the country's
sovereign exposures qualify for a zero percent risk weight under
section 32 of the capital rule and the sovereign debt of such member
country is not in default or has not been in default during the
previous five years. The amount of central bank deposits that could be
excluded from the denominator of the SLR would be limited by the amount
of deposit liabilities on the consolidated balance sheet of the
custodial banking organization that are linked to fiduciary or custody
and safekeeping accounts.
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\37\ For purposes of this proposed rulemaking, the OCC's capital
rule would be revised to include a definition of ``custody bank,''
defined as a national bank or Federal savings association that is a
subsidiary of a depository institution holding company that is a
custodial banking organization under 12 CFR 217.2. Similarly, the
FDIC's capital rule would be revised to include a definition of
``custody bank,'' defined as an FDIC-supervised institution that is
a subsidiary of a depository institution holding company that is a
custodial banking organization under 12 CFR 217.2.
\38\ The OECD is an intergovernmental organization founded in
1961 to stimulate economic progress and global trade. A list of OECD
member countries is available on the OECD's website, www.oecd.org.
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The agencies are proposing changes to the instructions for Call
Report Schedule RC-R and FFIEC 101 Schedule A, that would implement the
proposed changes to the agencies' capital rule.\39\ If modifications
are made to the proposed custodial bank rule when it is adopted in
final form, the agencies would modify the Call Report and FFIEC 101
proposals to incorporate such changes.
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\39\ In connection with the NPR to implement section 402 of the
EGRRCPA, the Board will separately propose to make corresponding
revisions to the Consolidated Financial Statements for Holding
Companies (FR Y-9C).
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2. Proposed Revisions to Call Report Schedule RC-R, Part I
As described in Section II.E.1. above, revisions have been proposed
to the calculation of the total leverage exposure, which is the
denominator of the SLR. Currently, the instructions for Schedule RC-R,
Part I, item 45.a, ``Total leverage exposure,'' reference section
10(c)(4) of the agencies' capital rule. However, the proposed revisions
to implement section 402 would allow an organization that qualifies as
a ``custodial banking organization'' to exclude deposits placed at a
``qualifying central bank'' from the total leverage exposure, limited
to the amount of deposit liabilities on the consolidated balance sheet
of the custodial banking organization that are linked to fiduciary or
custody and safekeeping accounts. Therefore, if the rule is implemented
as proposed, the capital rule would be modified through the
incorporation of section 402. Accordingly, the agencies would make
corresponding modifications to the instructions for the calculation of
the total leverage exposure for institutions that qualify as a
``custodial banking organization'' and the reporting of this exposure
in Schedule RC-R, Part I, item 45.a (which would become item 54.a, as
proposed above).
3. Proposed Revisions to FFIEC 101 Schedule A
Similar to its effect on the Call Report, the agencies' proposal to
implement section 402, as discussed in section II.E.1. above, would
also revise the total leverage exposure calculation that would be
reported on the FFIEC 101 Schedule A. Currently, there are two
calculations for the total leverage exposure in Schedule A, one is
contained in SLR Table 1 and the other is in SLR Table 2. The agencies
invite comment on the addition of a new data item to both tables in
FFIEC 101 Schedule A for the qualifying central bank deduction. The new
reporting item would be placed between existing data items 1.7 and 1.8
in SLR Table 1, with the instructions for the total leverage exposure
expected to include the new reporting item in the total calculation.
Similarly, for SLR Table 2, the new reporting item would be placed
between data items 2.2 and 2.3 and the total leverage exposure would be
modified to include the new reporting item in the total calculation.
F. Proposed Standardized Approach for Counterparty Credit Risk on
Derivative Contracts
1. Background
On December 17, 2018, the agencies published an NPR to implement a
new approach for calculating the exposure amount of derivative
contracts under the capital rule: the standardized approach for
counterparty credit risk (SA-CCR) (SA-CCR proposal).\40\
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\40\ 83 FR 64660 (December 17, 2018).
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The SA-CCR proposal would replace the current exposure methodology
(CEM) with SA-CCR in the capital rule for advanced approaches
institutions. Under the advanced approaches, an advanced approaches
institution would have to choose either SA-CCR or the internal models
methodology to calculate the exposure amount of its noncleared and
cleared derivative contracts and use SA-CCR to determine the risk-
weighted asset amount of its default fund contributions. In addition,
an advanced approaches institution would be required to use SA-CCR
(instead of CEM) to calculate the
[[Page 53238]]
exposure amount of its noncleared and cleared derivative contracts and
to determine the risk-weighted asset amount of its default fund
contributions under the standardized approach, as well as to determine
the exposure amount of its derivative contracts for purposes of the
SLR.
Under the SA-CCR proposal, a non-advanced approaches institution
would be able to use either CEM or SA-CCR to calculate the exposure
amount of its noncleared and cleared derivative contracts and to
determine the risk-weighted asset amount of its default fund
contributions under the standardized approach. A Category III banking
organization would also use SA-CCR for calculating its SLR if it
chooses to use SA-CCR to calculate its derivative and default fund
exposures.
The agencies propose to revise the instructions for Call Report
Schedule RC-R, Part II, as well as to SLR Table 2 in FFIEC 101 Schedule
A, to implement the proposed changes to the calculation of the exposure
amount of derivative contracts under the agencies' capital rule. If
modifications are made to the SA-CCR proposal when it is adopted in
final form, the agencies would modify the Call Report and FFIEC 101
proposals to incorporate such changes.
2. Proposed Revisions to Call Report Schedule RC-R, Part II
A banking organization must report the notional amount and
regulatory capital exposure amount of its derivatives exposures in
Schedule RC-R, Part II. The agencies propose to revise the instructions
for Schedule RC-R, Part II, consistent with the SA-CCR proposal.
Generally, the proposed revisions to the reporting of derivatives
elements in Schedule RC-R, Part II, are driven by the treatment of
cleared derivatives' variation margin (settled-to-market versus
collateralized-to-market), netting provisions impacting the
calculations of notional and exposure amounts, and attributions of
derivatives to cleared versus noncleared derivatives. The General
Instructions for Schedule RC-R, Part II, and the instructions for
Schedule RC-R, Part II, items 20, 21, and Memorandum items 1 through 3
would be revised.
3. Proposed Revisions to FFIEC 101 Schedule A, SLR Table 2
An advanced approaches institution must report the exposure amount
of its derivatives in SLR Table 2 of FFIEC 101 Schedule A. The agencies
propose to revise the instructions for SLR Table 2 consistent with the
SA-CCR proposal. In particular, institutions that are required to use
SA-CCR for the purpose of the SLR would apply the SA-CCR-based exposure
amount without consideration of the various collateral items currently
listed in the instructions for SLR Table 2. Institutions that continue
to use the current exposure method would use the current instructions
to complete SLR Table 2.
G. High Volatility Commercial Real Estate (HVCRE) Land Development
Proposal
1. Background
On September 28, 2018, the agencies published an HVCRE NPR to
revise the HVCRE exposure definition in section 2 of the capital rule
\41\ to conform to the statutory definition of an HVCRE ADC loan.\42\
Consistent with section 214 of the EGRRCPA, the agencies proposed in
the HVCRE NPR to exclude credit facilities that finance the
acquisition, development, or construction of one- to four-family
residential properties from the definition of HVCRE exposure.
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\41\ 12 CFR part 3 (OCC); 12 CFR part 217 (Board); and 12 CFR
part 324 (FDIC).
\42\ See 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); and 12 CFR
324.2 (FDIC).
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Section 214 became effective upon enactment of the EGRRCPA.
Accordingly, on July 6, 2018, the agencies issued a statement
(interagency statement), advising institutions that, when determining
which loans should be subject to a heightened risk weight, they may
choose to continue to apply the current regulatory definition of HVCRE
exposure, or they may choose to apply the heightened risk weight only
to those loans they reasonably believe meet the definition of ``HVCRE
ADC loan'' set forth in section 214 of the EGRRCPA.\43\ Until the
agencies take further action, institutions are advised to reference the
interagency statement for purposes of the HVCRE exposure definition and
regulatory reporting.
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\43\ Board, FDIC, and OCC, Interagency statement regarding the
impact of the Economic Growth, Regulatory Relief, and Consumer
Protection Act (EGRRCPA), https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20180706a1.pdf.
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On July 23, 2019, the agencies published the HVCRE Land Development
NPR,\44\ which would expand upon the HVCRE NPR to revise the definition
of HVCRE exposure in the capital rule by adding a new paragraph that
provides that the exclusion for one- to four-family residential
properties would not include credit facilities that solely finance land
development activities, such as the laying of sewers, water pipes, and
similar improvements to land, without any construction of one- to four-
family residential structures. In order for a loan to be eligible for
this exclusion, the credit facility would be required to include
financing for construction of one- to four-family residential
structures. This proposed revision to the capital rule would generally
align with the instructions for item 1.a.(2) of Call Report Schedule
RC-C, Part I, and FR Y-9C, Schedule HC-C.
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\44\ 84 FR 35344 (July 23, 2019).
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Allowing institutions to apply a consistent definition of one- to
four-family residential property and land development in this manner
would simplify reporting requirements, reduce burden, and promote
uniform application of the capital rule.
2. Proposed Revisions to Call Report Schedule RC-R, Part II
If the agencies adopt a final rule under section 214 of the
EGRRCPA, such final rule would supersede the July 6, 2018, interagency
statement and institutions would be required to apply the HVCRE
definition in that rule. Therefore, the agencies are proposing
conforming revisions to the instructions for Schedule RC-R, Part II,
items 4.b and 5.b, in all versions of the Call Report. No revisions to
the Call Report forms would be necessary.
3. Proposed Revisions to FFIEC 101 Schedule G
The changes to the HVCRE definition discussed above would also
affect the instructions for Schedule G--Wholesale Exposure. Therefore,
the agencies are proposing conforming revisions to the FFIEC 101
instructions to align with the new HVCRE definition in the final rule
implementing section 214.
H. Operating Lease Liabilities
In February 2016, the Financial Accounting Standards Board (FASB)
issued ASU No. 2016-02, ``Leases,'' which added Topic 842, Leases, to
the Accounting Standards Codification (ASC). Once ASU 2016-02 is
effective for an institution, the ASU's accounting requirements, as
amended by certain subsequent ASUs, supersede ASC Topic 840, Leases.
The most significant change that ASC Topic 842 makes to the
previous lease accounting requirements is to lessee accounting. Under
the lease accounting standards in ASC Topic 840, lessees recognize
lease assets and lease liabilities on the balance sheet for capital
leases, but do not recognize operating leases on the balance sheet. The
lessee accounting model under Topic 842 retains the distinction between
operating leases and capital leases, which the new standard labels
[[Page 53239]]
finance leases. However, the new standard requires lessees to record a
right-of-use (ROU) asset and a lease liability on the balance sheet for
operating leases. (For finance leases, a lessee's lease asset also is
designated an ROU asset.) In general, the new standard permits a lessee
to make an accounting policy election to exempt leases with a term of
one year or less at their commencement date from on-balance sheet
recognition.
For institutions that are public business entities, as defined
under U.S. generally accepted accounting principles (GAAP), ASU 2016-02
is effective for fiscal years beginning after December 15, 2018,
including interim reporting periods within those fiscal years. For
institutions that are not public business entities, at present, the new
standard is effective for fiscal years beginning after December 15,
2019, and interim reporting periods within fiscal years beginning after
December 15, 2020.\45\ Early application of the new standard is
permitted for all institutions.
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\45\ On August 15, 2019, the FASB issued a proposal that would
amend the effective date of ASC Topic 842 for institutions that are
not public business entities. As proposed, ASC Topic 842 would be
effective for such institutions for fiscal years beginning after
December 15, 2020, and interim reporting periods within fiscal years
beginning after December 15, 2021. The FASB would retain the
existing effective date for ASC Topic 842 for public business
entities. Early adoption would continue to be allowed.
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The Call Report Supplemental Instructions for March 2019 \46\
stated that a lessee should report lease liabilities for operating
leases and finance leases, including lease liabilities recorded upon
adoption of the ASU, in Schedule RC-M, items 5.b, ``Other borrowings,''
and 10.b, ``Amount of `Other borrowings' that are secured,'' which is
consistent with the current Call Report instructions for reporting a
lessee's obligations under capital leases under ASC Topic 840. In
response to this instructional guidance, the agencies received
questions from institutions concerning the reporting of a bank lessee's
lease liabilities for operating leases. These institutions indicated
that reporting operating lease liabilities as other liabilities instead
of other borrowings would better align the reporting of the single
noninterest expense item for operating leases in the income statement
(which is the presentation required by ASC Topic 842) with their
balance sheet classification and would be consistent with how these
institutions report operating lease liabilities internally.
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\46\ https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_FFIEC041_FFIEC051_suppinst_201903.pdf.
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The agencies have considered the views expressed by these
institutions and propose to require that operating lease liabilities be
reported on the Call Report balance sheet in Schedule RC, item 20,
``Other liabilities.'' In Schedule RC-G, Other Liabilities, operating
lease liabilities would be reported in item 4, ``All other
liabilities.'' In subitems of Schedule RC-G, item 4, institutions must
itemize and describe any components of this item in amounts greater
than $100,000 that exceed 25 percent of the amount reported in item 4.
Because of the expected prevalence of operating lease liabilities, the
agencies also propose to add a new subitem with the preprinted caption
``Operating lease liabilities'' to item 4 to facilitate the reporting
of these liabilities when their amount exceeds the reporting threshold
for itemizing and describing components of ``All other liabilities.''
As described in the Call Report Supplemental Instructions for June
2019, while the agencies are in the process of proposing this
instructional revision, the agencies are permitting institutions to
report the lease liability for operating leases in either Schedule RC-
G, item 4, ``All other liabilities,'' or Schedule RC-M, item 5.b,
``Other borrowings.'' \47\ If an institution chooses the latter
reporting treatment, the amount of operating lease liabilities reported
in Schedule RC-M, item 5.b, should also be reported in Schedule RC-M,
item 10.b, ``Amount of `Other borrowings' that are secured,'' and this
amount should not be reported in Schedule RC-O, item 7, as ``Unsecured
`Other borrowings'.'' An institution may choose to amend the reporting
of operating lease liabilities in its Call Report for March 31, 2019,
consistent with this instructional guidance.
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\47\ See the Call Report Supplemental Instructions for June
2019, https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_FFIEC041_FFIEC051_suppinst_201906.pdf.
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I. Reporting Home Equity Lines of Credit That Convert From Revolving to
Non-Revolving Status
Institutions report the amount outstanding under revolving, open-
end lines of credit secured by 1-4 family residential properties
(commonly known as home equity lines of credit or HELOCs) in item
1.c.(1) of Schedule RC-C, Part I, Loans and Leases. The amounts of
closed-end loans secured by 1-4 family residential properties are
reported in Schedule RC-C, Part I, item 1.c.(2)(a) or (b), depending on
whether the loan is a first or a junior lien.\48\
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\48\ Institutions report additional information on open-end and
closed-end loans secured by 1-4 family residential properties in
certain other Call Report schedules in accordance with the loan
category definitions in Schedule RC-C, Part I, items 1.c.(1),
1.c.(2)(a), and 1.c.(2)(b).
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A HELOC is a line of credit secured by a lien on a 1-4 family
residential property that generally provides a draw period followed by
a repayment period. During the draw period, a borrower has revolving
access to unused amounts under a specified line of credit. During the
repayment period, the borrower can no longer draw on the line of
credit, and the outstanding principal is either due immediately in a
balloon payment or repaid over the remaining loan term through monthly
payments. Because the Call Report instructions do not address the
reporting treatment for a home equity line of credit when it reaches
its end-of-draw period and converts from revolving to nonrevolving
status, the agencies have found diversity in how these credits are
reported in Schedule RC-C, Part I, items 1.c.(1), 1.c.(2)(a), and
1.c.(2)(b), and in other Call Report items that use the definitions of
these three loan categories.
In September 2015, to address this absence of instructional
guidance and promote consistency in reporting, the agencies proposed to
clarify the instructions for reporting loans secured by 1-4 family
residential properties by specifying that after a revolving open-end
line of credit has converted to non-revolving closed-end status, the
loan should be reported as closed-end in Schedule RC-C, Part I, item
1.c.(2)(a) or (b), as appropriate.\49\ As discussed in a subsequent
notice,\50\ the agencies received a number of comments that raised
concerns with the proposal. In particular, some commenters stated that
reclassifying HELOCs after the draw period could raise operational
challenges for institutions' loan systems that would require additional
time to implement. Based on the feedback received, the agencies did not
proceed with their proposed instructional clarification at that time.
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\49\ See 80 FR 56539 (September 18, 2015).
\50\ See 81 FR 45357 (July 13, 2016).
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The agencies continue to believe that it is important to collect
accurate data on loans secured by 1-4 family residential properties in
the Call Report. Consistent classification of HELOCs based on the
status of the draw period is particularly important for the agencies'
safety and soundness monitoring. Due to the structure of HELOCs
discussed above, borrowers generally are not required to make
[[Page 53240]]
principal repayments during the draw period, which may create a
financial shock for borrowers when they must make a balloon payment or
begin regular monthly repayments after the draw period. With some
institutions reporting HELOCs past the draw period as revolving, this
increases the amounts outstanding, charge-offs, recoveries, past dues,
and nonaccruals reported in the open-end category relative to the
amounts reported by institutions that treat HELOCs past the draw period
as closed-end, which makes the data less useful for agency comparisons
and safety and soundness monitoring. In addition, in ASU No. 2019-
04,\51\ the FASB amended ASC Subtopic 326-20 on credit losses to
require that, when presenting credit quality disclosures in notes to
financial statements prepared in accordance with U.S. GAAP, an entity
must separately disclose line-of-credit arrangements that are converted
to term loans from line-of-credit arrangements that remain in revolving
status. After further review, the agencies have determined that there
would be little or no impact to the regulatory capital calculations,
FDIC deposit insurance assessments, or other regulatory reporting
requirements as a result of this clarification, which were other
concerns previously raised by commenters.
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\51\ ASU No. 2019-04, ``Codification Improvements to Topic 326,
Financial Instruments--Credit Losses, Topic 815, Derivatives and
Hedging, and Topic 825, Financial Instruments,'' issued in April
2019.
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Therefore, the agencies are re-proposing to clarify the Call Report
instructions for Schedule RC-C, Part I, items 1.c.(1), 1.c.(2)(a), and
1.c.(2)(b), to state that revolving open-end lines of credit that have
converted to non-revolving closed-end status should be reported as
closed-end loans. The effect of this clarification would extend to the
instructions for the following data items that reference the Schedule
RC-C, Part I, loan category definitions for open-end and closed-end
loans secured by 1-4 family residential properties:
Schedule RI-B, Part I, items 1.c.(1), 1.c.(2)(a), and
1.c.(2)(b);
Schedule RC-C, Part I, Memorandum items 2.a.(1) through
(6) and 2.b.(1) through (6);
Schedule RC-M, items 13.a.(1)(c)(1), 13.a.(1)(c)(2)(a),
and 13.a.(1)(c)(2)(b) on the FFIEC 031 and FFIEC 041;
Schedule RC-N, items 1.c.(1), 1.c.(2)(a), and 1.c.(2)(b);
Schedule RC-N, items 12.a.(3)(a), 12.a.(3)(b)(1), and
12.a.(3)(b)(2) on the FFIEC 031 and FFIEC 041;
Schedule RC-O, Memorandum items 18.b, 18.c, and 18.d on
the FFIEC 031 and FFIEC 041;
Schedule RC-S, Memorandum items 2.a, 2.b, and 2.c on the
FFIEC 031 and FFIEC 041; and
Schedule SU, items 6 and 6.a on the FFIEC 051.
This instructional clarification would not apply to the reporting
of asset-backed securities collateralized by HELOCs in Schedule RC-B,
Memorandum item 5.b, on the FFIEC 031 and FFIEC 041 and Schedule RC-D,
Memorandum item 5.b on the FFIEC 031 and securitizations of closed-end
1-4 family residential loans and home equity lines in Schedule RC-S,
columns A and B, on the FFIEC 031, and columns A and G on the FFIEC
041.
To address prior comments regarding the time needed for any systems
changes, the agencies propose that compliance with the clarified
instructions would not be required until the March 31, 2021, report
date. Institutions not currently reporting in accordance with the
clarified instructions would be permitted, but not required, to report
in accordance with the clarified instructions before that date.
III. Timing
The agencies propose to make the capital-related reporting changes
in this notice effective the same quarters as the effective dates of
the various currently final or potential final capital rules discussed
in this notice. The agencies also propose that the changes in the scope
of the FFIEC 031 Call Report and in the reporting of operating lease
liabilities would be effective March 31, 2020, and the changes in the
reporting of construction, land development, and other land loans with
interest reserves and home equity lines of credit would be effective
March 31, 2021. The agencies invite comment on any difficulties that
institutions would expect to encounter in implementing the systems
changes necessary to accommodate the proposed revisions to the Call
Reports and the FFIEC 101 report or the minimum time required to make
systems changes to implement these changes.
The specific wording of the captions for the new or revised Call
Report data items discussed in this proposal and the numbering of these
data items should be regarded as preliminary.
IV. Request for Comment
Public comment is requested on all aspects of this joint notice.
Comment is specifically invited on:
(a) As an alternative to the approach proposed for reporting in
Schedule RC-R, Part I, in the FFIEC 041 and FFIEC 051 Call Reports for
March 31, 2020, by non-advanced approaches institutions that choose not
to early adopt the simplifications rule (discussed in Section II.A.1.
above), which would have the agencies provide instructions on how such
institutions should complete this schedule as of that report date,
whether the agencies should instead provide separate columns in
Schedule RC-R, Part I, in the FFIEC 041 and FFIEC 051 Call Reports for
the March 31, 2020, report date that would enable institutions to
report in either the column for the simplifications rule or the column
for the current capital rule for that report date? This alternative
approach would be similar to the proposed two-column approach in
Schedule RC-R, Part I, for the FFIEC 031 Call Report, but the two
columns would be included in the FFIEC 041 and FFIEC 051 Call Reports
only for the March 31, 2020, report date and the second column would be
removed from these two reports effective June 30, 2020, when the
simplifications rule would apply to all non-advanced approaches
institutions.
(b) For advanced approaches banking organizations, whether the
agencies should include items related to LTD and TLAC amounts, ratios,
and the TLAC buffer in the FFIEC 101. Please describe the benefits and
drawbacks of including these items in the FFIEC 101.
(c) For the reporting of derivatives data in Call Report Schedules
RC-D, RC-F, RC-G, RC-L (or SU on the 051), and RC-R, Part II, the
degree to which the agencies should align the reporting approaches
applicable to these schedules. In particular, please describe how the
agencies can ensure data consistency while reducing the burden of
reporting the fair values, notional amounts, and exposure amounts of
derivatives for settled-to-market and collateralized-to-market
derivatives in Schedules RC-D, RC-F, RC-G, RC-L (or SU on the 051), and
RC-R, Part II, as applicable. Please address whether the agencies
should adopt a consistent classification of derivatives by asset class
(e.g., interest rate, energy, and volatility derivative contracts) and
by product type (e.g., cleared swap, futures contract, exchange-traded
option).
(d) Whether the proposed revisions to the collections of
information that are the subject of this notice are necessary for the
proper performance of the agencies' functions, including whether the
information has practical utility;
(e) The accuracy of the agencies' estimates of the burden of the
[[Page 53241]]
information collections as they are proposed to be revised, including
the validity of the methodology and assumptions used;
(f) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(g) Ways to minimize the burden of information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(h) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
Comments submitted in response to this joint notice will be shared
among the agencies.
Dated: October 1, 2019.
Theodore J. Dowd,
Deputy Chief Counsel, Office of the Comptroller of the Currency.
Board of Governors of the Federal Reserve System, September 30,
2019.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
Dated at Washington, DC, on September 30, 2019.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019-21659 Filed 10-3-19; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P