Advanced Approaches Capital Framework Implementation
The Advanced Approaches capital framework requires certain banking organizations to use an internal ratings-based approach and other methodologies to calculate risk-based capital requirements for credit risk and advanced measurement approaches to calculate risk-based capital requirements for operational risk. The framework applies to large, internationally active banking organizations--generally those with at least $250 billion in total consolidated assets or at least $10 billion in total on-balance sheet foreign exposure--and includes the depository institution subsidiaries of those firms. Once a banking organization becomes subject to the advanced approaches rules, the banking organization must adopt a written implementation plan and complete a satisfactory parallel run of no less than four consecutive calendar quarters during which the banking organization complies with all the qualification requirements in the advanced approaches rules. The Board will notify the banking organization that it must begin using the advanced approaches rule once it determines that the banking organization fully complies with the relevant qualification requirements, has completed a satisfactory parallel run, and has adequate processes to ensure ongoing compliance with the relevant qualification requirements.
Advanced Approaches Opt-outs
Pursuant to Regulation YY, a bank holding company subsidiary of a foreign banking organization may, with the Board's prior written approval, elect not to comply with the advanced approaches rule. A bank holding company that elects not to comply with the advanced approaches rule would remain subject to the Board's standardized risk-based capital rules under the Board's Regulation Q. The Board has approved the elections from the following institutions.
HSBC North America Holdings, Inc. (PDF)