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Basel II Capital Accord
Notice of Proposed Rulemaking (NPR)
Preamble - Regulatory Flexibility Act Analysis
September 5, 2006 Skip repetitive navigation



Adoption of Common Appendix--Agency-Specific Text
Signature Pages
Regulatory Flexibility Act Analysis

The Regulatory Flexibility Act (RFA) requires an agency that is issuing a proposed rule to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities. 5 U.S.C. 603(a). The RFA provides that an agency is not required to prepare and publish an initial regulatory flexibility analysis if the agency certifies that the proposed rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b).

Pursuant to section 605(b) of the RFA (5 U.S.C. 605(b)), the agencies certify that this proposed rule will not, if promulgated in final form, have a significant economic impact on a substantial number of small entities. Pursuant to regulations issued by the Small Business Administration (13 CFR 121.201), a "small entity" includes a bank holding company, commercial bank, or savings association with assets of $165 million or less (collectively, small banking organizations). The proposed rule would require a bank holding company, national bank, state member bank, state nonmember bank, or savings association to calculate its risk-based capital requirements according to certain internal-ratings-based and internal model approaches if the bank holding company, bank, or savings association (i) has consolidated total assets (as reported on its most recent year-end regulatory report) equal to $250 billion or more; (ii) has consolidated total on-balance sheet foreign exposures at the most recent year-end equal to $10 billion or more; or (iii) is a subsidiary of a bank holding company, bank, or savings association that would be required to use the proposed rule to calculate its risk-based capital requirements.

The agencies estimate that zero small bank holding companies (out of a total of approximately 2,934 small bank holding companies), five small national banks (out of a total of approximately 1,090 small national banks), one small state member bank (out of a total of approximately 491 small state member banks), one small state nonmember bank (out of a total of approximately 3,249 small state nonmember banks), and zero small savings associations (out of a total of approximately 446 small savings associations) would be subject to the proposed risk-based capital requirements on a mandatory basis. In addition, each of the small banking organizations subject to the proposed rule on a mandatory basis would be a subsidiary of a bank holding company with over $250 billion in consolidated total assets or over $10 billion in consolidated total on-balance sheet foreign exposure. Therefore, the agencies believe that the proposed rule will not, if promulgated in final form, result in a significant economic impact on a substantial number of small entities.