Bank Capital Requirements: Federal Reserve and OCC Propose Amendments to the Enhanced Supplementary Leverage Ratio Requirements for U.S. G-SIBs

Sullivan & Cromwell LLP - April 17, 2018
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On April 11, 2018, the Federal Reserve and the OCC issued a joint notice of proposed rulemaking (the “NPR”) to modify the enhanced supplementary leverage ratio (“eSLR”) requirements for U.S. top-tier bank holding companies (“BHCs”) that are identified as U.S. global systemically important BHCs (“G-SIBs”) and their subsidiary insured depository institutions (“IDIs”) that are state member banks, national banks, or Federal savings associations, as well as to modify the Federal Reserve’s total loss-absorbing capacity (“TLAC”) leverage buffer and leverage-based long-term debt requirements for BHCs and U.S. intermediate holding companies (“IHCs”) of non-U.S. G-SIBs. The existing eSLR-related requirements became effective on January 1, 2018, and the TLAC-related requirements will become effective on January 1, 2019. Comments on the NPR are due within 30 days of its publication in the Federal Register, notably shorter than the 60-day comment period for the Federal Reserve’s April 10, 2018 proposal to significantly revise its Comprehensive Capital Analysis and Review (“CCAR”) process and capital rules to, among other things, introduce a stress leverage buffer requirement applicable to the tier 1 leverage ratio.

Although the FDIC adopted eSLR requirements for state nonmember bank subsidiaries of U.S. G-SIBs in an interagency rulemaking with the Federal Reserve and the OCC in 2014, the FDIC did not join the other agencies in issuing the NPR.