A final rule was published in the Federal Register on Friday by the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System that replaced existing risk-based and leverage capital rules.
“The final rule is consistent with the interim final rule published by the Federal Deposit Insurance Corporation,” according to an OCC bulletin released Friday. “The rule strengthens the definition of regulatory capital, increases risk-based capital requirements, and amends the methodologies for determining risk-weighted assets.”
This new rule provides a snapshot of what the NCUA is expected to announce at the end of the year. In July, the NCUA said it would develop a rule that would increase net worth requirements for credit unions with more than $50 million in assets.
“Under the final rule, an advanced approaches banking organization that is not an SLHC must comply with minimum common equity tier 1, tier 1, and total capital ratio requirements of 4.0%, 5.5%, and 8.0% during calendar year 2014, and 4.5%, 6.0%, 8.0%, respectively, beginning January 1, 2015,” said the rule. “These transition provisions are consistent with those under Basel III for internationally active banking organizations.”
The agencies retain the current treatment for residential mortgage exposures in the final rule.
“Consistent with the general risk-based capital rules, the final rule assigns a 50% or 100% risk weight to exposures secured by one to four family residential properties,” said the full text of the rule.
The final rule also “amends the methodologies for determining risk-weighted assets for all banking organizations, and introduces disclosure requirements that would apply to top-tier banking organizations domiciled in the United States with $50 billion or more in total assets.”
These revisions are intended to “enhance the risk sensitivity and remediate weaknesses identified over recent years,” said the rule.
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