banking organizations

Agencies Finalize Amendments to Swap Margin Rule

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On June 25, federal agencies finalized a rule that updates margin and capital requirements for banks and other entities with significant swap activities. The updated rule no longer requires entities that are part of the same banking organization to hold a specific amount of initial margin for uncleared swaps with each other, such swaps being known as inter-affiliate swaps. The changes to the swap margin rule also provide additional flexibility to allocate collateral internally. The final rule is intended to facilitate risk management and maintain existing safeguards. Release. Final Rule.

Joint Proposal on Leverage Ratio Standards

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On July 9, the Fed, the FDIC and the OCC issued a joint proposed rule to strengthen the leverage ratio standards for large, systemically significant U.S. banking organizations.  Under the proposed rule, bank holding companies with more than $700 billion in consolidated total assets or $10 trillion in assets under custody (covered BHCs) would be required to maintain a tier 1 capital leverage buffer of at least 2 percent above the minimum supplementary leverage ratio requirement of 3 percent, for a total of 5 percent.  The proposed rule would be effective on January 1, 2018.  Comments must be submitted within 60 days of publication in the Federal Register.  Joint Release.  Proposed Rule.

Rating Agency Developments

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On June 29, Moody’s released it consolidated global bank rating methodology. Moody’s Report.

On June 29, DBRS released its global methodology for banks and banking organizations. DBRS Report.

On June 29, Kroll Bond Ratings released its equipment lease and ABS rating methodology. Kroll Report.

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Large Bank Stress Testing Guidance Finalized

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On May 14, the Fed, FDIC, and OCC issued final supervisory guidance for stress testing practices at banking organizations with total consolidated assets of more than $10 billion. The guidance outlines general principles for a satisfactory stress testing framework and describes various stress testing approaches. Supervisory Guidance.