December 12, 2014

Federal Reserve Board requests comment for depository institution holding companies with non-traditional capital structures

For release at 4:00 p.m. EST

The Federal Reserve Board on Friday invited public comment on a proposed rulemaking to provide additional information on how to apply the Board's revised capital framework for depository institution holding companies that have non-traditional capital structures.

Institutional investors may structure their investments in banks and bank holding companies through non-stock entities, such as limited liability corporations and limited partnerships. However, certain capital instruments issued by these firms may not qualify as common equity tier 1 capital under the Board's revised regulatory capital rules. The proposal describes examples of the capital instruments typically issued by such institutions, discusses features that prevent certain capital instruments from qualifying as common equity tier 1 capital, and provides suggestions on changes that would allow qualification. To provide sufficient time for these depository institution holding companies to review and revise their capital structures, the proposal would extend the applicable compliance date with the Board's revised capital rules from January 1, 2015 to January 1, 2016.

The proposal also notes that the Board expects to propose regulatory capital rules in the future for savings and loan holding companies that are personal or family trusts and are not business trusts, and would provide a temporary exemption for those entities from the revised capital rules. The proposal also states that the Board expects to clarify the application of the regulatory capital rules to depository institution holding companies that are employee stock ownership plans. The proposal does not apply to most depository institution holding companies.

Comments on the proposed rule will be received through February 28, 2015.

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Last Update: December 12, 2014