Federal Deposit Insurance
Corporation
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-52-2013
October 30, 2013
LIQUIDITY COVERAGE RATIO:
Proposed Rule
Summary: The federal bank regulatory agencies are requesting comment on a proposed rule that would implement a
quantitative liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee
on Banking Supervision. The requirement is designed to promote the short-term resilience of the liquidity risk profile of
international banking organizations and enhance improvements in the measurement and management of liquidity risk.
Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter is
applicable only to depository institutions with $10 billion or more in total consolidated assets that are consolidated
subsidiaries of internationally active banking organizations.
Distribution:
FDIC-Supervised Banks (Commercial and
Savings
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Risk Officer
Related Topics:
Interagency Policy Statement on Funding
and Liquidity Risk Management
Attachment:
Liquidity Coverage Ratio: Liquidity Risk
Measurement, Standards, and
Monitoring (PDF Help)
Contact:
Bobby Bean, Associate Director, or Kyle
Hadley, Chief, Exam Support Section,
Division of Risk Management Supervision,
Capital Markets Branch,
at BBean@fdic.gov, KHadley@fdic.gov,or
(202) 898-6888
Note:
FDIC Financial Institution Letters (FILs)
may be accessed from the FDIC's Web
site
at http://www.fdic.gov/news/news/financial
/2013/index.html.
To receive FILs electronically, please
visit http://www.fdic.gov/about/subscriptio
ns/index.html.
Paper copies may be obtained through
the FDIC's Public Information Center,
3501 Fairfax Drive, E-1002, Arlington, VA
22226 (1-877-275-3342 or 703-562-
2200).
Highlights:
The proposed rule:
Establishes a short-term quantitative minimum LCR that assesses
exposures to contingent liquidity events.
Provides enhanced information about liquidity risk to managers and
supervisors, allowing for more effective oversight and supervision of
liquidity risk and appropriate supervisory responses.
Facilitates a more orderly resolution of a covered company in the event
of a failure.
Requires covered companies to maintain an amount of high quality liquid
assets, consisting of Level 1, Level 2A, and Level 2B liquid assets, that is
not less than 100 percent of the institution’s total net cash outflows over
a prospective 30-day period.
Accounts for asset risk and promotes diversification with haircuts and
caps.
Addresses liquidity risk by applying a series of shocks, with prescribed
run-off and inflow rates against a bank’s assets, obligations, and other
funding sources.
Requires covered companies to notify their primary federal regulator
when a liquidity shortfall exists (or when the LCR drops below 100
percent).
Establishes transitions requiring covered companies to comply with a
minimum liquidity coverage ratio of 80 percent as of January 1, 2015, 90
percent as of January 1, 2016, and 100 percent thereafter.Inactive
Corporation
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-52-2013
October 30, 2013
LIQUIDITY COVERAGE RATIO:
Proposed Rule
Summary: The federal bank regulatory agencies are requesting comment on a proposed rule that would implement a
quantitative liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee
on Banking Supervision. The requirement is designed to promote the short-term resilience of the liquidity risk profile of
international banking organizations and enhance improvements in the measurement and management of liquidity risk.
Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter is
applicable only to depository institutions with $10 billion or more in total consolidated assets that are consolidated
subsidiaries of internationally active banking organizations.
Distribution:
FDIC-Supervised Banks (Commercial and
Savings
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Risk Officer
Related Topics:
Interagency Policy Statement on Funding
and Liquidity Risk Management
Attachment:
Liquidity Coverage Ratio: Liquidity Risk
Measurement, Standards, and
Monitoring (PDF Help)
Contact:
Bobby Bean, Associate Director, or Kyle
Hadley, Chief, Exam Support Section,
Division of Risk Management Supervision,
Capital Markets Branch,
at BBean@fdic.gov, KHadley@fdic.gov,or
(202) 898-6888
Note:
FDIC Financial Institution Letters (FILs)
may be accessed from the FDIC's Web
site
at http://www.fdic.gov/news/news/financial
/2013/index.html.
To receive FILs electronically, please
visit http://www.fdic.gov/about/subscriptio
ns/index.html.
Paper copies may be obtained through
the FDIC's Public Information Center,
3501 Fairfax Drive, E-1002, Arlington, VA
22226 (1-877-275-3342 or 703-562-
2200).
Highlights:
The proposed rule:
Establishes a short-term quantitative minimum LCR that assesses
exposures to contingent liquidity events.
Provides enhanced information about liquidity risk to managers and
supervisors, allowing for more effective oversight and supervision of
liquidity risk and appropriate supervisory responses.
Facilitates a more orderly resolution of a covered company in the event
of a failure.
Requires covered companies to maintain an amount of high quality liquid
assets, consisting of Level 1, Level 2A, and Level 2B liquid assets, that is
not less than 100 percent of the institution’s total net cash outflows over
a prospective 30-day period.
Accounts for asset risk and promotes diversification with haircuts and
caps.
Addresses liquidity risk by applying a series of shocks, with prescribed
run-off and inflow rates against a bank’s assets, obligations, and other
funding sources.
Requires covered companies to notify their primary federal regulator
when a liquidity shortfall exists (or when the LCR drops below 100
percent).
Establishes transitions requiring covered companies to comply with a
minimum liquidity coverage ratio of 80 percent as of January 1, 2015, 90
percent as of January 1, 2016, and 100 percent thereafter.Inactive