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Financial Institution Letters

Risk-Based Capital Rules
Notice of Proposed Rulemaking on Modifications to the Risk-Based Capital Framework (Basel IA)
FIL-111-2006
December 26, 2006


Summary: The federal bank and thrift regulatory agencies have jointly issued the attached Notice of Proposed Rulemaking (NPR) and are seeking comment on possible modifications to the risk-based capital standards for all domestic banks, bank holding companies and savings associations that are not subject to the risk-based capital framework proposed in the Basel II NPR. The FDIC will accept comments on the NPR through March 26, 2007.

Highlights:

The modifications under consideration in the NPR are intended to:

  • Modernize the risk-based capital rules to ensure that the capital framework remains a relevant and reliable measure of risks present in the banking system.
  • Mitigate, to the extent possible, potentially material differences in capital requirements that may arise between banks that adopt Basel II and those banks that remain under the existing risk-based capital rules.
  • Maintain an operationally feasible capital framework that is relatively simple to implement for banking organizations subject to the existing risk-based capital rules.

A banking organization would be able to elect to adopt the modifications or remain subject to the agencies' existing risk-based capital rules.

The NPR includes a series of questions to solicit further comment on possible alternatives to the advanced approaches set forth in the Basel II NPR for determining risk-based capital requirements for large U.S. banking organizations.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer

Related Topics:
Risk-Based Capital Rules
12 CFR Part 325
Basel II

Attachment:

Contact:
Bobby R. Bean, Chief, Capital Markets Policy Section at bbean@fdic.gov or (202) 898-3575
Karl R. Reitz, Capital Markets Specialist at kreitz@fdic.gov or (202) 898-3857

Printable Format:
FIL-111-2006 - PDF 28k (PDF Help)

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2006/index.html.

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).


Last Updated 12/26/2006 communications@fdic.gov