FDIC Proposes Rule to Revise Deposit Insurance Assessments to Reflect the Basel III Capital Rule


The FDIC issued a notice of proposed rulemaking (the “Proposed Rule”) that would revise the FDIC’s risk-based deposit insurance assessment system to reflect the final Basel III capital rule (the “Final Capital Rule”) adopted by the FDIC, OCC and FRB last year.  For more on the Final Capital Rule, please see the discussions in the July 2, 2013 Financial Services Alert and the July 9, 2013 Financial Services Alert.

The Proposed Rule would revise the ratios and ratio thresholds for capital evaluations used in the risk-based deposit assessment system to conform to the prompt corrective action capital ratio and ratio thresholds.  This would result in revisions to the definitions of “well capitalized” and “adequately capitalized” for deposit insurance purposes in order to incorporate the revised capital ratio thresholds under the Final Capital Rule.  The revision would also incorporate the supplementary leverage ratio for institutions subject to such ratio.  The provisions of the Proposed Rule related to capital ratios are proposed to be effective January 1, 2015 and the provisions related to the supplementary leverage ratio are proposed to be effective January 1, 2018.  These changes would apply to all insured depository institutions, including those with less than $1 billion in assets.

The Proposed Rule would also revise the assessment base calculation for custodial banks to conform to the standardized approach asset risk weights adopted in the Final Capital Rule.  For deposit insurance assessment purposes, the Proposed Rule would apply the generally applicable risk weights (as revised under the Final Capital Rule’s standardized approach) even for institutions using the Final Capital Rule’s advanced approach.  This change is proposed to be effective January 1, 2015 and would apply to all custodial banks, including those with less than $1 billion in assets.

Additionally, the Proposed Rule would require all highly complex institutions to measure counterparty exposure for deposit insurance assessment purposes using the Final Capital Rule’s standardized approach credit equivalent amount for derivatives and the Final Capital Rule’s standardized approach exposure amount for other securities financing transactions, including repurchase transactions and margin loans.  This revision is proposed to be effective January 1, 2015 and would apply to only “highly complex institutions,” those large insured depository institutions “that are structurally and operationally complex or that pose unique challenges and risks to the [Deposit Insurance Fund] in the event of failure.”

The FDIC will accept comments on the Proposed Rule until 60 days following its publication in the Federal Register.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Goodwin | Attorney Advertising

Written by:


Goodwin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.