Agencies bring forward proposal, comment request, on reg capital requirements for mid-sized holding companies of FBOs

A proposal to determine the application of regulatory capital requirements for intermediate-sized holding companies of foreign banking organizations (FBOs) is set to be published Friday by the federal banking agencies. Comments will be due June 21.

In a notice to be published in the Federal Register, the Federal Deposit Insurance Corp. (FDIC), the Federal Reserve, and the Office of the Comptroller of the Currency (OCC) said the proposal would also apply to the depository institution subsidiaries of the FBOs. It would also apply a standardized liquidity requirement with respect to certain U.S. operations of large FBOs and certain of their depository institution subsidiaries, each according to risk-based categories.

“For liquidity, the proposal would require a foreign banking organization that meets certain criteria to comply with liquidity coverage ratio and net stable funding ratio requirements with respect to any U.S. intermediate holding company and certain depository institution subsidiaries thereof,” the proposal states. It adds that the Fed is not proposing but is requesting comment on whether it should impose standardized liquidity requirements on such foreign banking organizations with respect to their U.S. branch and agency networks, as well as possible approaches for doing so.

According to the three agencies, the proposal is consistent with a separate proposal issued by the Fed that would apply certain prudential standards to FBOs based on the same categories, and is similar to a proposal issued by the agencies last year that would determine the application of regulatory capital and standardized liquidity requirements for large U.S. banking organizations according to risk-based categories (also known as the “domestic interagency proposal”).

In addition, the agencies said, the Fed is modifying one aspect of the proposed requirements under the domestic interagency proposal with respect to certain banking organizations, specifically, “to propose the application of a standardized liquidity requirement to certain U.S. depository institution holding companies that meet specified criteria relating to their liquidity risk profile.”

The banking regulators are also making technical amendments to certain provisions of the domestic interagency proposal.

Changes to Applicability Thresholds for Regulatory Capital Requirements for Certain U.S. Subsidiaries of Foreign Banking Organizations and Application of Liquidity Requirements to Foreign Banking Organizations, Certain U.S. Depository Institution Holding Companies, and Certain Depository Institution Subsidiaries

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