TO: |
Chief Executive Officers of All National Banks, Federal Branches and Agencies, Department and Division Heads, and All Examining Personnel
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This bulletin summarizes the final rule
implementing the advanced approaches of the Basel II Capital Accord
that was published jointly today in the Federal Register
by the
Office of the Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance
Corporation, and the Office of Thrift Supervision (the agencies).
Because of its length, the final rule is not attached to this
bulletin, but can be accessed at http://www.occ.treas.gov/fr/fedregister/72fr69288.pdf
SUMMARY
The final rule establishes regulatory capital requirements and
supervisory expectations for credit and operational risks for banks
that choose or are required to adopt the advanced approaches of the
Basel II Capital Accord (specifically, the Internal Ratings Based
Approach for credit risk and the Advanced Measurement Approaches for
Operational Risk). The rule also articulates enhanced standards for
the supervisory review of capital adequacy for those banks.
The final rule includes several important
changes made to the September 2006 proposed rule in an attempt to
balance safety and soundness, regulatory burden, and international and domestic competitive equity considerations. As
a result of these changes, this rule is
now fundamentally consistent in most respects with the Basel
II Framework implemented internationally. However, the final rule does retain
the leverage ratio and prompt corrective action requirements,
safeguards unique to the U.S. supervisory process that the agencies
believe are critical for safety and soundness purposes.
The final rule retains the three groups of
banks identified in the proposed rule: (i) large or internationally
active banks that are required to adopt advanced capital approaches
under Basel II (core banks); (ii) banks that voluntarily decide to
adopt the advance approaches (opt-in banks); and (iii) banks that do
not adopt the advanced approaches (general banks), and for which the
provisions of the final rule are inapplicable. The final rule also
retains the proposed rule definition of a core bank as a bank that
meets either of two criteria: (i) consolidated assets of $250 billion or more, or (ii)
consolidated total on-balance-sheet foreign exposure of $10 billion or more. Also,
a bank is a core bank if it is a subsidiary
of a bank or bank holding company that uses advanced approaches.
The final rule
contains relevant implementation timeframes for core banks and
qualification requirements that each core and opt-in bank must
meet before using the advanced approaches for risk-based capital purposes. The preamble of the
final rule elaborates on the proposed rule’s discussion of
the supervisory review process under Pillar 2. The final
rule retains the disclosure requirements in the proposed rule that are consistent with
Pillar 3 of the Basel II Capital Accord.
The agencies expect to publish
in the near future a proposed rule that would
provide all non-core banks with the option to
adopt a standardized approach under the Basel II
Capital Accord.
FOR FURTHER INFORMATION, CONTACT:
Capital
Policy: Mark Ginsberg,
Risk Expert, Capital Policy Division, at (202)
927-4580
Legislative and Regulatory
Affairs: Ron
Shimabukuro, Senior Counsel, at (202) 874-5090.
/signed/
Kevin J. Bailey
Deputy Comptroller, Capital and Regulatory Policy
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(Note: Because of its
length, the final rule is not attached, but can be accessed at the
link below.)
Attachment: Final
Rulemaking
[http://www.occ.treas.gov/fr/fedregister/72fr69288.pdf]
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