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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|
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