Changes to a capital requirement for banking organizations predominantly engaged in custodial activities were finalized Tuesday by all three federal banking regulators, to take effect April 1, 2020.
The rule – which was finalized following a vote by the board of the Federal Deposit Insurance Corp. (FDIC) Board Tuesday – allows certain banking organizations that are predominantly engaged in custody, safekeeping, and asset servicing activities to exclude qualifying deposits at certain central banks from their supplementary leverage ratio.
According to the Federal Reserve (which, with the Office of the Comptroller of the Currency [OCC] and the FDIC, issued the rule), “the supplementary leverage ratio is one of many tools used by the federal bank regulatory agencies to determine minimum required capital levels and ensure financial stability in the event of stress in the banking system. It applies only to large or complex internationally active banking organizations.”
According to the Fed, The Bank of New York Mellon Corp., Northern Trust Corp., and State Street Corp., together with their depository institution subsidiaries, are the only banking firms would qualify for the rule, based on current data.