FDIC-Insured Institutions Report Net Income of $59.1 Billion in Fourth Quarter 2018


Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $59.1 billion in the fourth quarter of 2018, up $33.8 billion (133.4 percent) from a year ago. The improvement in net income was led by higher net operating revenue and lower income tax expenses. Financial results for the fourth quarter of 2018 are included in the FDIC’s latest Quarterly Banking Profile released February 21. Release.

FDIC Extends Comment Period Related to Its Request for Information on the Deposit Insurance Application Process


On February 12, the Federal Deposit Insurance Corporation (“FDIC“) extended the comment period related to the Request for Information (“RFI“) on the Deposit Insurance Application Process until March 31. The RFI is part of the FDIC’s ongoing efforts to enhance transparency, efficiency, and accountability. Release.

Agencies Approve Amendments to Swap Margin Rule


On September 21, the Farm Credit Administration, the FDIC, the Federal Housing Finance Agency, the Federal Reserve and the OCC approved final amendments to swap margin requirements to conform with recent rule changes that impose new restrictions on certain qualified financial contracts of systemically important banking organizations. These amendments established minimum margin requirements for swaps and security-based swaps that are not cleared through a clearinghouse. The margin requirements are designed to help ensure the safety and soundness of swap entities and reduce risks to the stability of the financial system associated with non-cleared swaps activity. Rule.

Agencies Issue Interim Final Rules Expanding Examination Cycles for Qualifying Small Banks and U.S. Branches and Agencies of Foreign Banks


On August 23, 2018, the Board of Governors of the Federal Reserve System (“Federal Reserve Board“), the Federal Deposit Insurance Corporation (“FDIC“) and the Office of the Comptroller of the Currency (“OCC“) “issued interim final rules to expand the number of insured depository institutions and U.S. branches and agencies of foreign banks eligible for an 18-month on-site examination cycle.” Once the interim final rules are published in the Federal Register, there will be 60 days available to provide comments. Federal Reserve Board Press Release. FDIC Press Release. OCC Press Release.

Agencies Issue Final Rulemaking to Shorten Settlement Cycle


On June 1, 2018, the Office of the Comptroller of the Currency (the “OCC“) and the Federal Deposit Insurance Corporation (the “FDIC“) issued a final rule to shorten the standard settlement cycle for securities purchased or sold by OCC-supervised and FDIC-supervised institutions from T+3 to T+2. This change is consistent with the industry’s transition to T+2 – banks are already complying with a two business day settlement standard. The effective date of the final rule is October 1, 2018. FDIC Press Release. OCC Press Release (dated June 7). Rule.

Federal Banking Agencies Finalize Extension of Certain Capital Rule Transitions


On November 21, 2017, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency “finalized a rule for certain banking organizations by extending the existing capital requirements for mortgage servicing assets and certain other items.”  These changes will be put into effect on January 1, 2018. FDIC Release. Federal Reserve Release. OCC release.

FDIC Adopts Final Rule on Qualified Financial Contracts


On September 27, 2017, the Federal Deposit Insurance Corporation finalized a rule, similar to the rule approved by the Federal Reserve Board, relating to termination and cancellation rights for specified contracts and specified institutions. Applicable types of agreements include “derivatives, securities lending, and short-term funding transactions, such as repurchase agreements.” FDIC Release.

Agencies Propose Simplifying Regulatory Capital Rules


On September 27, 2017, the Federal Deposit Insurance Corporation, the Federal Reserve Board and the Office of the Comptroller of the Currency announced a proposed rule intended to decrease regulation under these entities’ “regulatory capital rule.” The proposed rule “would apply only to banking organizations that are not subject to the ‘advanced approaches’ in the capital rule, which are generally firms with less than $250 billion in total consolidated assets and less than $10 billion in total foreign exposure.” FDIC Release. Federal Reserve Release. OCC Release.

Federal Reserve and FDIC Extend Deadline for Nineteen Foreign Banks and Two Domestic Bank Holding Companies to File Living Wills


On August 8, 2017, the Federal Reserve Board and Federal Deposit Insurance Corp. extended the deadline for 19 foreign banks and two domestic bank holding companies to file their next round of “living wills” detailing how they can be speedily and safely wound down in the event of a crisis. The new deadline for these firms to file their updated resolution plans is December 31, 2018, giving them an additional year “to address any supervisory guidance in their next plan submissions,” the regulators said in a statement. HSBC Holdings plc, the Toronto-Dominion Bank and Banco Santander SA are among the foreign banks receiving the extension, while the domestic group comprises CIT Group Inc. and Citizens Financial Group Inc. The resolution plans, also known as living wills, outline how the banks could be taken apart safely through the bankruptcy process if they are hit with a financial shock. The public portions of the plans provide an overview; more details about the banks’ structure and funding, as well as plans for failure, are kept confidential at the Fed and the FDIC. The other foreign banks covered by the extension are Banco Bilbao Vizcaya Argentaria SA, Bank of China Ltd., Bank of Montreal, BNP Paribas, BPCE, Coöperatieve Rabobank UA, Crédit Agricole SA, Industrial and Commercial Bank of China Ltd., Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc., Royal Bank of Canada, Société Générale, Standard Chartered PLC, Sumitomo Mitsui Financial Group Inc., the Bank of Nova Scotia and the Norinchukin Bank. The Fed and FDIC also said that two additional smaller foreign firms, Canara Bank and Mercantil Servicios Financieros CA, will be allowed to file reduced-content resolution plans going forward. These firms already submitted previous plans that have filled in regulators on the essentials of their limited U.S. operations, regulators said. Tuesday’s extension comes after the Fed and FDIC granted a living will extension last month to American International Group Inc. and Prudential Financial Inc., two nonbank companies that have been designated systemically important financial institutions by the Financial Stability Oversight Council and are subject to extra oversight. They were originally required to submit their plans by the end of December 2017, but now have until December 31, 2018, the Fed and the FDIC said.