Regulatory Capital Standards Proposed Deduction of Goodwill Net of Associated Deferred Tax Liability
FIL-100-2008 September 30, 2008
The federal banking agencies have jointly issued the attached Notice of Proposed Rulemaking (NPR) seeking comment on whether to allow goodwill, which must be deducted from Tier 1 capital, to be reduced by the amount of any associated deferred tax liability. The FDIC will accept comments on the NPR through October 30, 2008.
Under the agencies' existing regulatory capital rules, certain assets that must be deducted from Tier 1 capital may be reduced by any deferred tax liability specifically related to the asset.
In the attached NPR, the agencies propose to extend this treatment to goodwill acquired in a taxable business combination, thereby allowing a bank, bank holding company, or savings association to make the required deduction of goodwill from Tier 1 capital net of any associated deferred tax liability.
The NPR also requests comment on whether there are other intangible assets currently required to be fully deducted from Tier 1 capital for which the agencies should consider a similar treatment.
FDIC-Supervised Banks (Commercial and Savings)