Financial Institution Letter
FIL-111-2006
December 26, 2006
RISK-BASED CAPITAL RULES
Notice of Proposed Rulemaking on Modifications to the Risk-
Based Capital Framework (Basel IA)
Summary: The federal bank and thrift regulatory agencies have jointly issued the attached
Notice of Proposed Rulemaking (NPR) and are seeking comment on possible modifications to
the risk-based capital standards for all domestic banks, bank holding companies and savings
associations that are not subject to the risk-based capital framework proposed in the Basel II
NPR. The FDIC will accept comments on the NPR through March 26, 2007.
Distribution:
FDIC-Supervised Banks (Commercial and Savings)
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
Related Topics:
Risk-Based Capital Rules
12 CFR Part 325
Basel II
Attachment:
• “Key Aspects of the Proposed Rule on
Modifications to the Risk-Based Capital
Framework”
• Notice of Proposed Rulemaking, Risk-Based
Capital Guidelines; Capital Adequacy
Guidelines; Capital Maintenance: Domestic
Capital Modifications
Contact:
Bobby R. Bean, Chief, Capital Markets Policy
Section at bbean@fdic.gov or (202) 898-3575
Karl R. Reitz, Capital Markets Specialist at
kreitz@fdic.gov or (202) 898-3857
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2006/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
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 modifications under consideration in the NPR are
intended to:
• Modernize the risk-based capital rules to
ensure that the capital framework remains a
relevant and reliable measure of risks
present in the banking system.
• Mitigate, to the extent possible, potentially
material differences in capital requirements
that may arise between banks that adopt
Basel II and those banks that remain under
the existing risk-based capital rules.
• Maintain an operationally feasible capital
framework that is relatively simple to
implement for banking organizations subject
to the existing risk-based capital rules.
A banking organization would be able to elect to
adopt the modifications or remain subject to the
agencies’ existing risk-based capital rules.
The NPR includes a series of questions to solicit
further comment on possible alternatives to the
advanced approaches set forth in the Basel II NPR
for determining risk-based capital requirements for
large U.S. banking organizations.
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
FIL-111-2006
December 26, 2006
RISK-BASED CAPITAL RULES
Notice of Proposed Rulemaking on Modifications to the Risk-
Based Capital Framework (Basel IA)
Summary: The federal bank and thrift regulatory agencies have jointly issued the attached
Notice of Proposed Rulemaking (NPR) and are seeking comment on possible modifications to
the risk-based capital standards for all domestic banks, bank holding companies and savings
associations that are not subject to the risk-based capital framework proposed in the Basel II
NPR. The FDIC will accept comments on the NPR through March 26, 2007.
Distribution:
FDIC-Supervised Banks (Commercial and Savings)
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
Related Topics:
Risk-Based Capital Rules
12 CFR Part 325
Basel II
Attachment:
• “Key Aspects of the Proposed Rule on
Modifications to the Risk-Based Capital
Framework”
• Notice of Proposed Rulemaking, Risk-Based
Capital Guidelines; Capital Adequacy
Guidelines; Capital Maintenance: Domestic
Capital Modifications
Contact:
Bobby R. Bean, Chief, Capital Markets Policy
Section at bbean@fdic.gov or (202) 898-3575
Karl R. Reitz, Capital Markets Specialist at
kreitz@fdic.gov or (202) 898-3857
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2006/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
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 modifications under consideration in the NPR are
intended to:
• Modernize the risk-based capital rules to
ensure that the capital framework remains a
relevant and reliable measure of risks
present in the banking system.
• Mitigate, to the extent possible, potentially
material differences in capital requirements
that may arise between banks that adopt
Basel II and those banks that remain under
the existing risk-based capital rules.
• Maintain an operationally feasible capital
framework that is relatively simple to
implement for banking organizations subject
to the existing risk-based capital rules.
A banking organization would be able to elect to
adopt the modifications or remain subject to the
agencies’ existing risk-based capital rules.
The NPR includes a series of questions to solicit
further comment on possible alternatives to the
advanced approaches set forth in the Basel II NPR
for determining risk-based capital requirements for
large U.S. banking organizations.
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990