Federal Register: Banking Agencies Propose Supplementary Leverage Ratio Relief

The Federal Reserve Board, the FDIC and the Office of the Comptroller of the Currency's proposal to amend a capital requirement for U.S. banking organizations engaged primarily in custodial activities was published in the Federal Register. Comments on the proposal must be submitted by July 1, 2019.

As previously covered, the proposal implements Section 402 of the Economic Growth, Regulatory Relief and Consumer Protection Act, which directs federal banking regulators to modify the capital rule to exclude from the supplementary leverage ratio ("SLR") certain custodial banks' central bank deposits. Under the proposal a custodial banking organization would be permitted to exclude deposits placed at a "qualifying central bank" (i.e., any Federal Reserve Bank, the European Central Bank, or a central bank of an Organization for Economic Cooperation and Development member country whose sovereign exposures qualify for a zero percent right weight) from the SLR denominator.