Federal Reserve Board

FEDERAL RESERVE SYSTEM

12 CFR Parts 208 and 225

[Regulations H and Y; Docket No. R-0982]

Risk-Based Capital Standards: Unrealized Holding Gains on Certain Equity Securities

AGENCIES: Office of the Comptroller of the Currency, Treasury; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; and Office of Thrift Supervision, Treasury.

ACTION: Final rule.

SUMMARY: The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS) (collectively, the Agencies) are amending their respective risk-based capital standards for banks, bank holding companies, and thrifts (institutions) with regard to the regulatory capital treatment of unrealized holding gains on certain equity securities. These gains are reported as a component of equity capital under U.S. generally accepted accounting principles (GAAP), but have not been included in regulatory capital under the Agencies' capital standards. This final rule permits institutions to include in supplementary (Tier 2) capital up to 45 percent of the pretax net unrealized holding gains on certain available-for-sale (AFS) equity securities. The final rule is intended to make the regulatory capital treatment of these unrealized gains consistent with the international standards of the Basle Accord.

EFFECTIVE DATE: This final rule is effective October 1, 1998. The Agencies will not object if an institution wishes to apply the provisions of this final rule beginning with the date it is published in the Federal Register.

FOR FURTHER INFORMATION CONTACT:

OCC: Roger Tufts, Senior Economic Advisor (202/874-5070), Tom Rollo, National Bank Examiner (202/874-5070), Capital Policy Division; or Ronald Shimabukuro, Senior Attorney (202/874-5090), Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 250 E. Street, S.W., Washington, DC 20219.

Board: Norah Barger, Assistant Director (202/452-2402), Barbara Bouchard, Manager (202/452-3072), John F. Connolly, Supervisory Financial Analyst (202/452-3621), Division of Banking Supervision and Regulation; or Mark E. Van Der Weide, Staff Attorney (202/452-2263), Legal Division. For the hearing impaired only, Telecommunication Device for the Deaf (TDD), Diane Jenkins (202/452- 3544), Board of Governors of the Federal Reserve System, 20th and C Streets, N.W., Washington, DC 20551.

FDIC: For supervisory issues, Stephen G. Pfeifer, Examination Specialist (202/898-8904) or Carol L. Liquori, Examination Specialist (202/898-7289), Accounting Section, Division of Supervision; for legal issues, Jamey Basham, Counsel, Legal Division (202/898-7265), Federal Deposit Insurance Corporation, 550 17th Street, N.W., Washington, DC 20429.

OTS: Michael D. Solomon, Senior Policy Advisor (202/906-5654), Supervision Policy; or Vern McKinley, Senior Attorney (202/906-6241), Regulations and Legislation Division, Office of the Chief Counsel, Office of Thrift Supervision, 1700 G Street, N.W., Washington, DC 20552.

Summary and final rule. (69 KB PDF)

1998 Banking and consumer regulatory policy


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Last update: August 28, 1998, 10:00 AM