A proposal to extend by 18 months the initial compliance dates for foreign banks subject to the Federal Reserve’s single-counterparty credit limit rule was issued by the agency Friday, with a 30-day comment period.
The extension under the proposal, the Fed said, would provide additional time for foreign jurisdictions’ versions of the rule to become effective and would apply only to the combined U.S. operations of the foreign banks and not to any U.S. intermediate holding companies of those banks.
In June 2018, the board finalized a rule setting single-counterparty credit limits for bank holding companies and foreign banking organizations with $250 billion or more in total consolidated assets. The rule, according to the Fed, applied those limits to both the intermediate holding company and combined U.S. operations of foreign banks. For the limits applied to combined U.S. operations, the Fed said, the rule allows a foreign bank to comply by certifying that it meets a similar rule or standard of its home country.
“To date, certain foreign jurisdictions are in the process of finalizing their rules or standards,” the Fed said in announcing the proposal. “The extension would allow additional time for foreign banks to comply with the Board’s rule via certification with a similar home country rule or standard. All other parts of the Board’s rule remain unchanged.”
According to the Fed, under the proposed extension, the largest foreign banks need to comply by July 1, 2021, while smaller foreign banks would need to comply by Jan. 1, 2022.