Joint Release
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
For Immediate Release July 15, 2008
Agencies Issue Final Guidance on Supervisory Review Process (Pillar 2) Related
to Implementation of Basel II Advanced Approaches Rule
The federal banking and thrift agencies today issued final guidance outlining the
supervisory review process for banking organizations implementing the new advanced
capital adequacy framework known as Basel II. The final guidance relating to
supervisory review is aimed at helping banking organizations meet certain qualification
requirements in the advanced approaches rule, which took effect April 1.
The advanced approaches rule consists of three pillars: minimum risk-based capital
requirements (Pillar 1); supervisory review of capital adequacy (Pillar 2); and market
discipline through enhanced public disclosures (Pillar 3). The final Pillar 2 guidance
details the agencies' standards for ensuring that each institution subject to the advanced
approaches rule has a rigorous process for assessing its overall capital adequacy in
relation to its risk profile and a comprehensive strategy for maintaining appropriate
capital levels.
Although the guidance does not differ significantly from the proposed Pillar 2 guidance
issued in February 2007, the agencies made some enhancements based on comments
received and in consideration of key lessons from the events of the past year. The Pillar
2 guidance is being issued by the Federal Reserve Board, the Federal Deposit
Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of
Thrift Supervision. The effective date of the Pillar 2 guidance is 30 days following its
publication in the Federal Register, which is expected shortly. The final Pillar 2 guidance
is attached.
Attachment:
Supervisory Guidance: Supervisory Review Process of Capital Adequacy (Pillar 2)
Related to the Implementation of the Basel II Advanced Capital Framework - PDF (PDF
Help)
Media Contacts:
Federal Reserve Deborah Lagomarsino (202) 452-2955
FDIC LaJuan Williams-Dickerson (202) 898-6993
OCC Kevin Mukri (202) 874-5770
OTS William Ruberry (202) 906-6677
FDIC-PR-59-2008
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
For Immediate Release July 15, 2008
Agencies Issue Final Guidance on Supervisory Review Process (Pillar 2) Related
to Implementation of Basel II Advanced Approaches Rule
The federal banking and thrift agencies today issued final guidance outlining the
supervisory review process for banking organizations implementing the new advanced
capital adequacy framework known as Basel II. The final guidance relating to
supervisory review is aimed at helping banking organizations meet certain qualification
requirements in the advanced approaches rule, which took effect April 1.
The advanced approaches rule consists of three pillars: minimum risk-based capital
requirements (Pillar 1); supervisory review of capital adequacy (Pillar 2); and market
discipline through enhanced public disclosures (Pillar 3). The final Pillar 2 guidance
details the agencies' standards for ensuring that each institution subject to the advanced
approaches rule has a rigorous process for assessing its overall capital adequacy in
relation to its risk profile and a comprehensive strategy for maintaining appropriate
capital levels.
Although the guidance does not differ significantly from the proposed Pillar 2 guidance
issued in February 2007, the agencies made some enhancements based on comments
received and in consideration of key lessons from the events of the past year. The Pillar
2 guidance is being issued by the Federal Reserve Board, the Federal Deposit
Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of
Thrift Supervision. The effective date of the Pillar 2 guidance is 30 days following its
publication in the Federal Register, which is expected shortly. The final Pillar 2 guidance
is attached.
Attachment:
Supervisory Guidance: Supervisory Review Process of Capital Adequacy (Pillar 2)
Related to the Implementation of the Basel II Advanced Capital Framework - PDF (PDF
Help)
Media Contacts:
Federal Reserve Deborah Lagomarsino (202) 452-2955
FDIC LaJuan Williams-Dickerson (202) 898-6993
OCC Kevin Mukri (202) 874-5770
OTS William Ruberry (202) 906-6677
FDIC-PR-59-2008