This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
21256
Vol. 76, No. 73
Friday, April 15, 2011
1 Assessments, Large Bank Pricing, 76 FR 10672
(February 25, 2011) (to be codified at 12 CFR 327.9).
2 A large institution is defined as an insured
depository institution: (1) That had assets of $10
billion or more as of December 31, 2006 (unless, by
reporting assets of less than $10 billion for four
consecutive quarters since then, it has become a
small institution); or (2) that had assets of less than
$10 billion as of December 31, 2006, but has since
had $10 billion or more in total assets for at least
four consecutive quarters, whether or not the
institution is new.
3 A ‘‘highly complex institution’’ is defined as: (1)
An insured depository institution (excluding a
credit card bank) that has had $50 billion or more
in total assets for at least four consecutive quarters
and that either is controlled by a U.S. parent
holding company that has had $500 billion or more
in total assets for four consecutive quarters, or is
controlled by one or more intermediate U.S. parent
holding companies that are controlled by a U.S.
holding company that has had $500 billion or more
in assets for four consecutive quarters, and (2) a
processing bank or trust company. A processing
bank or trust company is an insured depository
institution whose last three years’ non-lending
interest income, fiduciary revenues, and investment
banking fees, combined, exceed 50 percent of total
revenues (and its last three years’ fiduciary
revenues are non-zero), whose total fiduciary assets
total $500 billion or more and whose total assets for
at least four consecutive quarters have been $10
billion or more.
4 These adjustments are the unsecured debt
adjustment, the depository institution debt
adjustment, and the brokered deposit adjustment.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
Proposed Assessment Rate
Adjustment Guidelines for Large and
Highly Complex Institutions
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Request for comment.
SUMMARY: The FDIC seeks comment on
proposed guidelines that would be used
to determine how adjustments could be
made to the total scores that are used in
calculating the deposit insurance
assessment rates of large and highly
complex insured institutions. Total
scores are determined according to the
Assessments and Large Bank Pricing
approved by the FDIC Board on
February 7, 2011.
DATES: Comments must be received on
or before May 31, 2011.
ADDRESSES: You may submit comments,
identified by ‘‘Adjustment Guidelines,’’
by any of the following methods:
• Agency Web site: http://
www.fdic.gov/regulations/laws/federal/
propose.html. Follow instructions for
submitting comments on the Agency
Web site.
• E-mail: Comments@FDIC.gov.
Include ‘‘Adjustment Guidelines’’ in the
subject line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
• Hand Delivery/Courier: Guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
Instructions: All submissions received
must include the agency name and
‘‘Adjustment Guidelines’’ in the heading.
All comments received will be posted to
the extent practicable and, in some
instances, the FDIC may post summaries
of categories of comments, with the
comments themselves available in the
FDIC’s reading room. Comments will be
posted at http://www.fdic.gov/
regulations/laws/federal/propose.html,
including any personal information
provided.
FOR FURTHER INFORMATION CONTACT: Lisa
Ryu, Chief, Large Bank Pricing Section,
Division of Insurance and Research,
(202) 898–3538; Andrew Felton, Acting
Chief, Large Bank Pricing Section,
Division of Insurance and Research,
(202) 898–3823; Mike Anas, Senior
Financial Analyst, Division of Insurance
and Research, (630) 241–0359 x 8252;
and Christopher Bellotto, Counsel, Legal
Division, (202) 898–3801, 550 17th
Street, NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
On February 7, 2011 (76 FR 10672
(Feb. 25, 2011)), the FDIC Board
amended its assessment regulations (the
Amended Assessment Regulations), by,
among other things, adopting a new
methodology for determining
assessment rates for large institutions.1 2
The Amended Assessment Regulations
eliminate risk categories for large
institutions and combine CAMELS
ratings and forward-looking financial
measures into one of two scorecards,
one for highly-complex institutions and
another for all other large institutions.3
Each of the two scorecards produces
two scores—a performance score and a
loss severity score—that are combined
into a total score, which cannot be
greater than 90 or less than 30. The
FDIC can adjust a bank’s total score up
or down by no more than 15 points, but
the resulting score cannot be greater
than 90 or less than 30. The score is
then converted to an initial base
assessment rate, which, after application
of other possible adjustments, results in
a total assessment rate.4 The total
assessment rate is multiplied by the
bank’s assessment base to calculate the
amount of its assessment obligation.
Tables 1 and 2 show the scorecards
for large and highly complex
institutions, respectively.
TABLE 1—SCORECARD FOR LARGE INSTITUTIONS
Scorecard measures and components Measure weights
(percent)
Component
weights
(percent)
P Performance Score
P.1 Weighted Average CAMELS Rating ................................................................................................... 100 30
P.2 Ability to Withstand Asset-Related Stress: ......................................................................................... .............................. 50
Tier 1 Leverage Ratio ........................................................................................................................... 10 ..............................
Concentration Measure ........................................................................................................................ 35 ..............................
Core Earnings/Average Quarter-End Total Assets * ............................................................................ 20 ..............................
VerDate Mar<15>2010 16:22 Apr 14, 2011 Jkt 223001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\15APP1.SGM 15APP1
jlentini on DSKJ8SOYB1PROD with PROPOSALS
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
21256
Vol. 76, No. 73
Friday, April 15, 2011
1 Assessments, Large Bank Pricing, 76 FR 10672
(February 25, 2011) (to be codified at 12 CFR 327.9).
2 A large institution is defined as an insured
depository institution: (1) That had assets of $10
billion or more as of December 31, 2006 (unless, by
reporting assets of less than $10 billion for four
consecutive quarters since then, it has become a
small institution); or (2) that had assets of less than
$10 billion as of December 31, 2006, but has since
had $10 billion or more in total assets for at least
four consecutive quarters, whether or not the
institution is new.
3 A ‘‘highly complex institution’’ is defined as: (1)
An insured depository institution (excluding a
credit card bank) that has had $50 billion or more
in total assets for at least four consecutive quarters
and that either is controlled by a U.S. parent
holding company that has had $500 billion or more
in total assets for four consecutive quarters, or is
controlled by one or more intermediate U.S. parent
holding companies that are controlled by a U.S.
holding company that has had $500 billion or more
in assets for four consecutive quarters, and (2) a
processing bank or trust company. A processing
bank or trust company is an insured depository
institution whose last three years’ non-lending
interest income, fiduciary revenues, and investment
banking fees, combined, exceed 50 percent of total
revenues (and its last three years’ fiduciary
revenues are non-zero), whose total fiduciary assets
total $500 billion or more and whose total assets for
at least four consecutive quarters have been $10
billion or more.
4 These adjustments are the unsecured debt
adjustment, the depository institution debt
adjustment, and the brokered deposit adjustment.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
Proposed Assessment Rate
Adjustment Guidelines for Large and
Highly Complex Institutions
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Request for comment.
SUMMARY: The FDIC seeks comment on
proposed guidelines that would be used
to determine how adjustments could be
made to the total scores that are used in
calculating the deposit insurance
assessment rates of large and highly
complex insured institutions. Total
scores are determined according to the
Assessments and Large Bank Pricing
approved by the FDIC Board on
February 7, 2011.
DATES: Comments must be received on
or before May 31, 2011.
ADDRESSES: You may submit comments,
identified by ‘‘Adjustment Guidelines,’’
by any of the following methods:
• Agency Web site: http://
www.fdic.gov/regulations/laws/federal/
propose.html. Follow instructions for
submitting comments on the Agency
Web site.
• E-mail: Comments@FDIC.gov.
Include ‘‘Adjustment Guidelines’’ in the
subject line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
• Hand Delivery/Courier: Guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
Instructions: All submissions received
must include the agency name and
‘‘Adjustment Guidelines’’ in the heading.
All comments received will be posted to
the extent practicable and, in some
instances, the FDIC may post summaries
of categories of comments, with the
comments themselves available in the
FDIC’s reading room. Comments will be
posted at http://www.fdic.gov/
regulations/laws/federal/propose.html,
including any personal information
provided.
FOR FURTHER INFORMATION CONTACT: Lisa
Ryu, Chief, Large Bank Pricing Section,
Division of Insurance and Research,
(202) 898–3538; Andrew Felton, Acting
Chief, Large Bank Pricing Section,
Division of Insurance and Research,
(202) 898–3823; Mike Anas, Senior
Financial Analyst, Division of Insurance
and Research, (630) 241–0359 x 8252;
and Christopher Bellotto, Counsel, Legal
Division, (202) 898–3801, 550 17th
Street, NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
On February 7, 2011 (76 FR 10672
(Feb. 25, 2011)), the FDIC Board
amended its assessment regulations (the
Amended Assessment Regulations), by,
among other things, adopting a new
methodology for determining
assessment rates for large institutions.1 2
The Amended Assessment Regulations
eliminate risk categories for large
institutions and combine CAMELS
ratings and forward-looking financial
measures into one of two scorecards,
one for highly-complex institutions and
another for all other large institutions.3
Each of the two scorecards produces
two scores—a performance score and a
loss severity score—that are combined
into a total score, which cannot be
greater than 90 or less than 30. The
FDIC can adjust a bank’s total score up
or down by no more than 15 points, but
the resulting score cannot be greater
than 90 or less than 30. The score is
then converted to an initial base
assessment rate, which, after application
of other possible adjustments, results in
a total assessment rate.4 The total
assessment rate is multiplied by the
bank’s assessment base to calculate the
amount of its assessment obligation.
Tables 1 and 2 show the scorecards
for large and highly complex
institutions, respectively.
TABLE 1—SCORECARD FOR LARGE INSTITUTIONS
Scorecard measures and components Measure weights
(percent)
Component
weights
(percent)
P Performance Score
P.1 Weighted Average CAMELS Rating ................................................................................................... 100 30
P.2 Ability to Withstand Asset-Related Stress: ......................................................................................... .............................. 50
Tier 1 Leverage Ratio ........................................................................................................................... 10 ..............................
Concentration Measure ........................................................................................................................ 35 ..............................
Core Earnings/Average Quarter-End Total Assets * ............................................................................ 20 ..............................
VerDate Mar<15>2010 16:22 Apr 14, 2011 Jkt 223001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\15APP1.SGM 15APP1
jlentini on DSKJ8SOYB1PROD with PROPOSALS
21257Federal Register / Vol. 76, No. 73 / Friday, April 15, 2011 / Proposed Rules
5 The Amended Assessment Regulations also
require that the FDIC publish aggregate statistics on
adjustments each quarter once the guidelines are
adopted. 76 FR 10699.
6 Assessment Rate Adjustment Guidelines for
Large Institutions and Insured Foreign Branches in
Risk Category I, 72 FR 27122 (May 14, 2007).
TABLE 1—SCORECARD FOR LARGE INSTITUTIONS—Continued
Scorecard measures and components Measure weights
(percent)
Component
weights
(percent)
Credit Quality Measure ......................................................................................................................... 35 ..............................
P.3 Ability to Withstand Funding-Related Stress: ..................................................................................... .............................. 20
Core Deposits/Total Liabilities .............................................................................................................. 60 ..............................
Balance Sheet Liquidity Ratio .............................................................................................................. 40 ..............................
L Loss Severity Score
L.1 Loss Severity Measure ....................................................................................................................... .............................. 100
* Average of five quarter-end total assets (most recent and four prior quarters).
TABLE 2—SCORECARD FOR HIGHLY COMPLEX INSTITUTIONS
Measures and components Measure weights
(percent) Component
weights (percent)
P Performance Score
P.1 Weighted Average CAMELS Rating ................................................................................................... 100 30
P.2 Ability to Withstand Asset-Related Stress: ......................................................................................... .............................. 50
Tier 1 Leverage Ratio ........................................................................................................................... 10 ..............................
Concentration Measure ........................................................................................................................ 35 ..............................
Core Earnings/Average Quarter-End Total Assets .............................................................................. 20 ..............................
Credit Quality Measure and Market Risk Measure .............................................................................. 35 ..............................
P.3 Ability to Withstand Funding-Related Stress: ..................................................................................... .............................. 20
Core Deposits/Total Liabilities .............................................................................................................. 50 ..............................
Balance Sheet Liquidity Ratio .............................................................................................................. 30 ..............................
Average Short-Term Funding/Average Total Assets ........................................................................... 20 ..............................
L Loss Severity Score
L.1 Loss Severity ....................................................................................................................................... .............................. 100
* Average of five quarter-end total assets (most recent and four prior quarters).
Scorecard measures (other than the
weighted average CAMELS rating) are
converted to scores between 0 and 100
based on minimum and maximum
cutoff values for each measure. A score
of 100 reflects the highest risk and a
score of 0 reflects the lowest risk. A
value reflecting lower risk than the
cutoff value receives a score of 0 and a
value reflecting higher risk than the
cutoff value receives a score of 100. A
risk measure value between the
minimum and maximum cutoff values
converts linearly to a score between 0
and 100, which is rounded to 3 decimal
points. The weighted average CAMELS
rating is converted to a score between 25
and 100, where 100 reflects the highest
risk and 25 reflects the lowest risk.
In most cases, the total score
produced by the applicable scorecard
will correctly reflect an institution’s
overall risk relative to other large
institutions; however, the scorecard
includes assumptions that may not be
appropriate for all institutions.
Therefore, the FDIC believes that it is
important that it have the ability to
consider idiosyncratic or other relevant
risk factors that are not adequately
captured in the scorecards and make
appropriate adjustments to an
institution’s total score. The Amended
Assessment Regulations state that, after
consultation with an institution’s
primary Federal regulator, the FDIC may
make a limited adjustment to an
institution’s total score based upon risks
that are not adequately captured in the
scorecard. The Amended Assessment
Regulations provide that no new
adjustments will be made until new
guidelines have been published for
comment and approved by the FDIC’s
Board of Directors.5
The proposed guidelines describe the
process the FDIC would follow to
determine whether to make an
adjustment and to determine the size of
any adjustment. This request for
comments also outlines the process the
FDIC would use when notifying an
institution regarding an adjustment.
These proposed guidelines would
supersede the large bank pricing
adjustment guidelines published by the
FDIC on May 14, 2007 (the 2007
Guidelines).6 The 2007 Guidelines
outline the adjustment process for the
large bank assessment system then in
effect. The Amended Assessment
Regulations include scorecards that
explicitly incorporate some of the risks
that were previously captured primarily
through large bank adjustments. The
proposed guidelines take these changes
into account; however, the processes for
communicating with affected
institutions and implementing
adjustments once determined remain
largely unchanged from the 2007
Guidelines, except that the FDIC is now
explicitly allowing institutions to
request a large bank adjustment.
The FDIC seeks comments on the
proposed guidelines and the procedures
for making an adjustment to an
institution’s score. Although the FDIC
has in this instance chosen to publish
the proposed guidelines and solicit
comment from the industry, notice and
comment are not required and need not
be employed to make future changes to
the guidelines.
VerDate Mar<15>2010 17:40 Apr 14, 2011 Jkt 223001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\15APP1.SGM 15APP1
jlentini on DSKJ8SOYB1PROD with PROPOSALS
5 The Amended Assessment Regulations also
require that the FDIC publish aggregate statistics on
adjustments each quarter once the guidelines are
adopted. 76 FR 10699.
6 Assessment Rate Adjustment Guidelines for
Large Institutions and Insured Foreign Branches in
Risk Category I, 72 FR 27122 (May 14, 2007).
TABLE 1—SCORECARD FOR LARGE INSTITUTIONS—Continued
Scorecard measures and components Measure weights
(percent)
Component
weights
(percent)
Credit Quality Measure ......................................................................................................................... 35 ..............................
P.3 Ability to Withstand Funding-Related Stress: ..................................................................................... .............................. 20
Core Deposits/Total Liabilities .............................................................................................................. 60 ..............................
Balance Sheet Liquidity Ratio .............................................................................................................. 40 ..............................
L Loss Severity Score
L.1 Loss Severity Measure ....................................................................................................................... .............................. 100
* Average of five quarter-end total assets (most recent and four prior quarters).
TABLE 2—SCORECARD FOR HIGHLY COMPLEX INSTITUTIONS
Measures and components Measure weights
(percent) Component
weights (percent)
P Performance Score
P.1 Weighted Average CAMELS Rating ................................................................................................... 100 30
P.2 Ability to Withstand Asset-Related Stress: ......................................................................................... .............................. 50
Tier 1 Leverage Ratio ........................................................................................................................... 10 ..............................
Concentration Measure ........................................................................................................................ 35 ..............................
Core Earnings/Average Quarter-End Total Assets .............................................................................. 20 ..............................
Credit Quality Measure and Market Risk Measure .............................................................................. 35 ..............................
P.3 Ability to Withstand Funding-Related Stress: ..................................................................................... .............................. 20
Core Deposits/Total Liabilities .............................................................................................................. 50 ..............................
Balance Sheet Liquidity Ratio .............................................................................................................. 30 ..............................
Average Short-Term Funding/Average Total Assets ........................................................................... 20 ..............................
L Loss Severity Score
L.1 Loss Severity ....................................................................................................................................... .............................. 100
* Average of five quarter-end total assets (most recent and four prior quarters).
Scorecard measures (other than the
weighted average CAMELS rating) are
converted to scores between 0 and 100
based on minimum and maximum
cutoff values for each measure. A score
of 100 reflects the highest risk and a
score of 0 reflects the lowest risk. A
value reflecting lower risk than the
cutoff value receives a score of 0 and a
value reflecting higher risk than the
cutoff value receives a score of 100. A
risk measure value between the
minimum and maximum cutoff values
converts linearly to a score between 0
and 100, which is rounded to 3 decimal
points. The weighted average CAMELS
rating is converted to a score between 25
and 100, where 100 reflects the highest
risk and 25 reflects the lowest risk.
In most cases, the total score
produced by the applicable scorecard
will correctly reflect an institution’s
overall risk relative to other large
institutions; however, the scorecard
includes assumptions that may not be
appropriate for all institutions.
Therefore, the FDIC believes that it is
important that it have the ability to
consider idiosyncratic or other relevant
risk factors that are not adequately
captured in the scorecards and make
appropriate adjustments to an
institution’s total score. The Amended
Assessment Regulations state that, after
consultation with an institution’s
primary Federal regulator, the FDIC may
make a limited adjustment to an
institution’s total score based upon risks
that are not adequately captured in the
scorecard. The Amended Assessment
Regulations provide that no new
adjustments will be made until new
guidelines have been published for
comment and approved by the FDIC’s
Board of Directors.5
The proposed guidelines describe the
process the FDIC would follow to
determine whether to make an
adjustment and to determine the size of
any adjustment. This request for
comments also outlines the process the
FDIC would use when notifying an
institution regarding an adjustment.
These proposed guidelines would
supersede the large bank pricing
adjustment guidelines published by the
FDIC on May 14, 2007 (the 2007
Guidelines).6 The 2007 Guidelines
outline the adjustment process for the
large bank assessment system then in
effect. The Amended Assessment
Regulations include scorecards that
explicitly incorporate some of the risks
that were previously captured primarily
through large bank adjustments. The
proposed guidelines take these changes
into account; however, the processes for
communicating with affected
institutions and implementing
adjustments once determined remain
largely unchanged from the 2007
Guidelines, except that the FDIC is now
explicitly allowing institutions to
request a large bank adjustment.
The FDIC seeks comments on the
proposed guidelines and the procedures
for making an adjustment to an
institution’s score. Although the FDIC
has in this instance chosen to publish
the proposed guidelines and solicit
comment from the industry, notice and
comment are not required and need not
be employed to make future changes to
the guidelines.
VerDate Mar<15>2010 17:40 Apr 14, 2011 Jkt 223001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\15APP1.SGM 15APP1
jlentini on DSKJ8SOYB1PROD with PROPOSALS