Banking agencies issue final reg capital rule changes, simplify compliance for community banks

A final rule that simplifies regulatory capital rules for banks, providing for eased compliance for community banks and others, was issued jointly Tuesday by the three federal banking regulatory agencies.

The final rule, issued by the Federal Deposit Insurance Corp. (FDIC), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC), simplifies several requirements of the regulatory capital rules, but only for banking organizations that do not use the “advanced approaches” capital framework. These generally include firms with less than $250 billion in total consolidated assets and less than $10 billion in total foreign exposure, the agencies noted in a release.

“The final rule is intended to simplify and clarify a number of the more complex aspects of the agencies’ existing regulatory capital rules. Specifically, it simplifies the capital treatment for mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interest,” they stated. “The final rule also would allow bank holding companies and savings and loan holding companies to redeem common stock without prior approval unless otherwise required.”

The final rule will be effective as of April 1, 2020, for the amendments to simplify capital rules; and as of Oct. 1, 2019, for revisions to the pre-approval requirements for the redemption of common stock and other technical amendments.

The agencies said proposed revisions to the definition of high-volatility commercial real estate (HVCRE) exposure, which were made in the notice of proposed rulemaking, are being addressed in a separate rulemaking.

Agencies Simplify Regulatory Capital Rules

RR: Banking agencies ready to finalize simplified compliance for community banks with certain aspects of the capital rule (June 12, 2019)