Federal Register: Banking Agencies Temporarily Adjust Supplementary Leverage Ratio

A Federal Reserve Board, FDIC and OCC interim final rule to temporarily adjust the supplementary leverage ratio calculation for certain depository institutions was published in the Federal Register. The interim final rule went into effect upon publication in the Federal Register on June 1, 2020; comments must be submitted no later than July 16, 2020.

As previously covered, the interim final rule allows 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 Treasury securities and deposits at Federal Reserve Banks from the supplementary leverage ratio calculation. The interim final rule is intended to enable such depository institutions to expand lending to households and businesses. 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 interim final rule does not make any changes to the tier 1 leverage ratio.