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Federal Reserve Bank OF DALLAS R O B E R T D. M c T E E R , J R . P R E S ID E N T A N D C H IE F E X E C U T I V E O F F I C E R October 5 , 1992 dallas, texas 75222 Notice 92-94 TO: The Chief Executive Officer of each member bank and others concerned in the Eleventh Federal Reserve District SUBJECT Interim Rule and Request for Comment on Regulation H (Membership of State Banking Institutions in the Federal Reserve System) and Regulation Y (Bank Holding Companies and Change in Bank Control) DETAILS The Board is proposing to modify its risk-based capital guidelines for state member banks and bank holding companies to include the European Bank for Reconstruction and Development, the International Finance Corporation, and the Nordic Investment Bank in the list of named multilateral lending institu tions that are eligible for a 20 percent risk weight. This proposed modifica tion would conform the Board’s risk-based capital guidelines more closely to interpretive guidance adopted by the other G-10 countries that are signatories to the Basle Accord. The interim rule was effective September 23, receive comments by October 23, 1992. Comments should W. Wiles, Secretary, Board of Governors of the Federal Street and Constitution Avenue, N.W., Washington, D.C. should refer to Docket No. R-0776. 1992. The Board must be addressed to William Reserve System, 20th 20551. All comments ATTACHMENT A copy of the Board’s notice as it appears on pages 43889-90, Vol. 57, No. 185, of the Federal Register dated September 23, 1992, is attached. MORE INFORMATION For more information, please contact Dorsey Davis at (214) 922-6051. For additional copies of this Bank’s notice, please contact the Public Affairs Department at (214) 922-5254. Sincerely yours, For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012: Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Federal Register / Vol. 57, No. 185 / Wednesday, September 23, 1992 / Rules and Regulations 43889 FEDERAL RESERVE SYSTEM 12 CFR Parts 208 and 225 [Regulations H and Y; D ocket No. R -0776] Capital; Capital Adequacy Guidelines Board of G overnors of the Federal R eserve System. a c t i o n: Interim rule. SUMMARY: The Board is proposing to modify its risk-b ased capital guidelines for state m em ber b an k s an d b ank holding com panies to include the E uropean Bank for Reconstruction an d Developm ent, the International Finance Corporation, an d the N ordic Investm ent Bank in the list of nam ed m ultilateral lending institutions th a t are eligible for a 20 p ercen t risk weight. This proposed m odification w ould conform the Board's risk-based capital guidelines more closely to interpretive guidance ad opted by the other G-10 countries th at are signatories to the Basle A ccord. DATES: The interim rule is effective as of S eptem ber 23,1992. Com m ents m ust be received by O cto ber 23,1992. A D D R E S SE S : Com ments, w hich should refer to Docket No. R-0776, m ay be m ailed to the Board of G overnors of the Federal Reserve System, 20th S treet an d Constitution A venue, NW., W ashington, DC 20551, to the attention of Mr. W illiam W. W iles, Secretary. Com m ents ad d re ssed to Mr. W iles m ay also be delivered to the B oard's m ail room betw een 8:45 a.m. and 5:15 p.m., an d to the security control room outside of those hours. Both the m ail room and the security control room are accessible from the courtyard entrance on 20th Street b etw e en Constitution A venue an d C Street, NW . Com m ents m ay be inspected in Room B-1122 b etw e en 9:00 a.m. an d 5:00 p.m. w eekdays, except as provided in § 261.8 of the B oard's Rules Regarding A vailability of Information, 12 CFR 261.8. AGENCY: FOR FURTHER INFORMATION CONTACT: Rhoger H Pugh, A ssistan t Director (202/ 728-5883), Kelly S. Shaw, Supervisory Financial A nalyst (202/452-3054), N orah Barger, Supervisory Financial A nalyst (202/452-2402), Division of Banking Supervision a n d Regulation; an d Brian E. J. Lam, A ttorney (202/452-2067), Legal Division, B oard of G overnors of the F ederal R eserve System. For the hearing im paired o n ly, T elecom m unication Device for the D eaf (TDD), D orothea T hom pson (202/452-3544), Board of G overnors of the Federal Reserve System, 20th and C Streets, NW., W ashington, DC. SUPPLEMENTARY INFORMATION: U nder the risk-based capital fram ew ork estab lished by the Basle A ccord, claim s on, an d claim s gu aran teed by, m ultilateral lending institutions and regional developm ent b an k s in w hich G10 countries are shareholding m em bers m ay b e accorded, at natio n al discretion, a 20 percen t risk weight. Like the Basle Accord, the B oard’s risk-based capital guidelines specify five m ultilateral lending institutions an d regional developm ent b a n k s 1 that are eligible for the 20 p ercen t risk weight. T he guidelines further sta te th a t other m ultilateral lending institutions and regional developm ent ban k s m ay be accord ed a 20 p ercen t risk w eight if the U.S. governm ent is a sh areh o ld er or contributing member. The Board h as received a n um ber of requ ests concerning the risk w eight of claim s on, an d inv estm ents in securities issued by, the E uropean Bank for R econstruction an d D evelopm ent [EBRD), the Intern ational Finance C orporation (IFC), a n d the Nordic Investm ent Bank (NIB). In respo nse to these requests, the B oard is proposing to clarify th a t b a n k holding com panies an d sta te m em ber b an k s m ay assign a 20 percent risk w eight to claim s on, or g u aran teed by, the EBRD or the IFC. The U.S. is a contributing sh areh o ld er of the EBRD, b u t it w a s estab lish ed after the original publication of the capital adequ acy guidelines. Since the IFC is a sub sid iary of the W orld Bank, an organization th a t the guidelines specifically nam e as an institution eligible for the 20 p ercen t risk weight, it a lread y implicitly is included in the 20 percent risk category. H ow ever, since num erous inquiries h av e b een received w ith reg ard to the ap prop riate risk category for the IFC, the Board is proposing to include it in the list of m ultilateral lending institutions an d regional developm ent b an k s specifically nam ed in the guidelines as eligible for the 20 percent risk weight. The Board is also proposing to perm it b an k holding com panies an d state m em ber b an k s to assign a 20 p ercent 1 International Bank for Reconstruction and Development (World Bank), Latin American Development Bank, Asian Development Bank, African Development Bank, and the European Investment Bank. risk w eight to claim s on, or g uaran teed by, NIB. U nder the current guidelines, NIB w ould not qualify for a 20 percent risk w eight as the U.S. is n eith er a sh areho ld er nor a contributing member. H ow ever, the Basle Com m ittee on Banking Supervision h a s interpreted the criteria in the Basle A ccord for assigning a m ultilateral lending institution to the 20 percent risk category to m ean that any country m ay include NIB in this preferential risk category since Sweden, a G-10 country, is a sh areh older in NIB. Thus, adding NIB to the list of nam ed m ultilateral lending institutions eligible for a 20 percent risk w eight w ould serve to conform the B oard’s risk-based capital guidelines m ore closely to the in terpretative guidance adopted by the other G-10 countries th a t are signatories to the Basle A ccord. The pro po sed m odifications to the risk-based capital guidelines w ould hav e the effect of allow ing claims collateralized b y securities issued by the EBRD, IFC, an d NIB to be included in the 20 percent risk category. The B oard is seeking com m ent on the proposed change to its risk-based capital guidelines. Because the B oard w ishes to im plem ent in a n appropriate and expeditious m an n er guidance ad o p ted by the G-10 countries in connection w ith the Basle A ccord, an d b ecau se the prop osed revision w ould reduce ra th e r th a n ex p a n d the regulatory b u rd en on state m em ber ban k s an d b an k holding com panies, the Board is im plem enting the proposed change im m ediately as an interim rule. Regulatory Flexibility A ct A nalysis The Federal R eserve Board does not believe adoption of this proposal w ould h av e a significant econom ic im pact on a su bstan tial num ber of sm all business entities (in this case, sm all banking organizations), in accord w ith the spirit and purposes of the Regulatory Flexibility A ct (5 U.S.C. 601 e t seq.). In this regard, the prop osed revision w ould reduce certain regulatory b urd ens on b ank holding com panies as it w ould reduce the capital charge on certain transactions. In addition, b ecau se the risk-based capital guidelines generally do not apply to b an k holding com panies w ith consolidated assets of less than $150 million, this proposal will not affect such com panies. List o f Subjects 12 CFR P art 208 A ccounting, Agriculture, Banks, banking, Confidential business inform ation, Currency, F ederal Reserve 43890 Federal Register / Vol. 57, No. 185 / Wednesday, September 23, 1992 / Rules and Regulations System, Reporting an d recordkeeping requirem ents, Securities. 12 CFR P art 225 A dm inistrative practice and procedure, Banks, banking, Federal R eserve System, Holding com panies. Reporting an d recordkeeping requirem ents. Securities. For the rea so n s set forth in the pream ble, a n d p ursu an t to the B oard's authority u n d er section 5(b) of the Bank Holding Com pany A ct of 1956 (12 U.S.C. 1844 (b)), an d section 910 of the Intern ation al Lending Supervision A ct of 1983 (12 U.S.C. 3909), the Board is am ending 12 CFR p arts 208 a n d 225 as follows: PART 208—MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM 1. The authority citation for p a rt 208 is revised to re a d as follows: Authority: Sections 9 ,11(a), 11(c), 19, 21, 25. and 25(a) of the Federal Reserve Act, as am ended (12 U.S.C. 321-338, 248(a). 248(c). 461, 481-486, 601 and 611, respectively); sections 4 ,13(j), and 18(o) of the Federal Deposit Insurance Act, as am ended (12 U.S.C. 1814,1823(j), andl828{o), respectively); section 7(a) of the International Banking Act of 1978 (12 U.S.C. 3105); sections 907-910 of the International Lending Supervision A ct of 1983 (12 U.S.C. 3906-3909); sections 2 ,12(b), 12(g), 12(i), 15B(c) (5), 17,17A and 23 of the Securities Exchange Act of 1934 (15 U.S.C. 78b, 781(b), 781(g), 78l(i), 78o-4(c) (5), 78q, 7Bq 1, and 78w, respectively): section 5155 of the Revised Statutes (12 U.S.C. 36) as amended by the M cFadden Act of 1927; and sections 1101-1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3310 and 3331-3351). 2. A p pen dix A to p art 208 is am end ed by revising the second sen ten ce of the secon d p arag rap h in III.C.2 to r e a d as follows: Appenix A to Part 208—Capital Adequacy Guidelines for State Member Banks: Risk* Based Measure * * * * * portions of claims guaranteed by, the International Bank for Reconstruction and Development (W orld Bank), the International Finance Corporation, the Interam erican Development Bank, the Asian Development Bank, the African Development Bank, the European Investm ent Bank, the European Bank for Reconstruction and Development, the Nordic Investm ent Bank, and other m ultilateral lending institutions or regional development banks in which the U.S. government is a shareholder or contributing member.*** * 32 For this purpose, U.S. government-sponsored agencies are defined as agencies originally established or chartered by the federal government to serve public purposes specified by the U.S. Congress but whose obligations are not explicitly guaranteed by the full faith and credit of the U.S. government. These agencies include the Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA), the Farm Credit System, the Federal Home Loan Bank System, and the Student Loan Marketing Association (SLMA). Claims on U.S. govemment- * * * PART 225—BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL 1. The authority citatio n for p a rt 225 is revised to read as follows: Authority: 12 U.S.C. 1817(j) (13), 1818(b). 1828(o), 1831i, 1843(c) (8), 1844(b), 1972(1), 3106. 3108, 3907, 3909, 3310. 3331-3351, and sec. 306 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (Pub. L. 102-242, 105 Stat. 2236 (1991)). 2. A p pend ix A to part 225 is am en ded by revising the seco nd se n ten c e of the second p ara g ra p h in III.C.2 to re a d as follows: Appendix A to Part 225—Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based M easure * * * * * HI. * * * C. * * * 2. ***In addition, this category also includes claims on, and the portions of claimB that are guaranteed by, U.S. governmentsponsored35 agencies and claims on, and the portions of claims guaranteed by, the International Bank for Reconstruction and Development (W orld Bank), the International Finance Corporation, the Interam erican Development Bank, the Asian Development Bank, the African Development Bank, the European Investm ent Bank, the European Bank for Reconstruction and Development, the Nordic Investm ent Bank, and other m ultilateral lending institutions or regional development banks in which the U.S. government is a shareholder or contributing member.*** * III. * • * C. * * * 2. ***In addition, this category also Includes claims on. and the portions of claims that are guaranteed by, U.S. governmentsponsored32 agencies and claims on, and the * * * * * sponsored agencies include capital stock in a Federal Home Loan Bank that is held as a condition of membership in that Bank. 35 For this purpose, U.S. government-sponsored agencies are defined as agencies originally established or chartered by the federal government to serve public purposes specified by the U.S. Congress but whose obligations are not explicitly guaranteed by the full faith and credit of the U.S. government. These agencies include the Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA), the Farm Credit System, the Federal Home Loan Bank System, and the Student Loan Marketing Association (SLMA). Claims on U.S. governmentsponsored agencies include capital stock in a Federal Home Loan Bank that is held as a condition of membership in that Bank. Board of Governors of the Federal Reserve System, September 16,1992. William W. Wiles, Secre tary o f the Board. [FR Doc. 92-23025 Filed 9-22-92; 8:45 am| BILLING CODE 6 2 1 0 - 0 1 - f