December 23, 2016

US Board of Governors of the Federal Reserve System Finalizes Dividend Rule

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Shearman & Sterling LLP

The US Federal Reserve Board issued a final rule, amending Regulation I to implement provisions of the Fixing America’s Surface Transportation (FAST) Act, a five-year bill that reauthorized, at then-current levels, the core programs providing federal transportation funding to the states. The final rule adopts substantively all of the provisions of the interim final rule issued in February of this year. The rule will reduce the dividend rate for banks with total assets of more than $10 billion to the lesser of 6% or the most recent 10-year Treasury auction rate prior to the dividend payment. The rule also adjusts the treatment of accrued dividends when a Federal Reserve Bank issues or cancels capital stock owned by a large member bank.

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