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Banking Agencies Temporarily Adjust Supplementary Leverage Ratio

The Federal Reserve Board, the FDIC and the OCC (collectively, the "Agencies") made temporary adjustments to the supplementary leverage ratio calculation for certain depository institutions to enable them to expand lending to households and businesses.

In accordance with the interim final rule, the Agencies permitted certain depository institution subsidiaries of U.S. global systemically important bank holding companies, and any depository institution subject to certain capital standards (i.e., Category II or Category III standards), to elect to exclude U.S. Treasury Department securities and deposits at Federal Reserve Banks from the supplementary leverage ratio calculation. Institutions opting to utilize this temporary change are required to receive approval from their primary federal banking regulators prior to making certain capital distributions (e.g., paying dividends to a parent company).

The Agencies noted that the interim final rule does not make any changes to the tier 1 leverage ratio.

The interim final rule will go into effect upon publication in the Federal Register and comments must be submitted no later than 45 days thereafter. The interim final rule is set to expire on March 31, 2021.

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