Proposal to apply CBLR framework to deposit insurance assessments noted in new FDIC letter

A proposal for comment on application of the community bank leverage ratio (CBLR) framework to the deposit insurance assessment system is explained in a new Financial Institution Letter issued Tuesday to all banks and thrifts insured by the Federal Deposit Insurance Corp. (FDIC).

The FDIC Board authorized publication of a proposed rule Dec. 18 that would apply the CBLR framework it proposed jointly with the Federal Reserve and Office of the Comptroller of the Currency (OCC) in November to the deposit insurance assessment system. Comments on this notice of proposed rulemaking will be accepted for 60 days after publication in the Federal Register.

Under the FDIC proposal, the agency would calculate the assessment base and assessment rate of a CBLR bank using the regulatory capital items under the proposed framework; however, the proposed rule would provide a CBLR bank with the option to continue to use tier 1 capital, the tier 1 leverage ratio, or both, for assessments purposes, the agency said.

The FDIC notes in its FIL that all CBLR banks would be assessed using the small bank pricing methodology.

This proposal clarifies that a CBLR bank that meets the definition of “custodial bank” under the assessment regulations would have no change to its custodial bank deduction or reporting items required to calculate the deduction, the agency said in the letter. It said that to assist banks in understanding the effects of the proposed rule, it is providing a spreadsheet tool that estimates deposit insurance assessment amounts under the NPR (using data as of Sept. 30, 2018).

FDIC FIL-6-2019

RR: ‘Simple’ capital adequacy measure for banks, BHCs under $10 billion proposed (Nov. 21, 2018)

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