District Circular Letters

December 7, 2001

BANKING SUPERVISION AND REGULATION:
RISK-BASED CAPITAL GUIDELINES AND
INTERNATIONAL BANKING OPERATIONS

To State Member Banks, Bank Holding Companies,
U.S. Branches and Agencies of Foreign Banks,
and Others Concerned,
in the Twelfth Federal Reserve District

Request for Comment: Risk-Based Capital Guidelines; Supplementary Capital Elements (Tier 2 Capital); Deferred Tax Assets (R-1117)

The Board of Governors of the Federal Reserve System is proposing to amend its risk-based capital guidelines. The goal is to clarify that deferred tax assets in excess of the allowable amount (disallowed deferred tax assets) are included in the items that are deducted from tier 1 capital for the purpose of determining the maximum allowable amount of tier 2 capital that a banking organization may include in qualifying total capital and the maximum allowable amount of term subordinated debt and intermediate-term preferred stock that may be treated as supplementary capital. The proposed rule would reduce the maximum allowable amount of tier 2 capital for institutions that have disallowed deferred tax assets, as well as the amount of term subordinated debt and intermediate-term preferred stock that those institutions could include in supplementary capital. This clarification will make the Federal Reserve's capital guidelines consistent with those of the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS).

The proposed rule was published in the Federal Register on November 27, 2001.

Comments must be received by December 27, 2001.

International Banking Operations: Final Rule; Correcting Amendments (R-0994)

The Board of Governors of the Federal Reserve System is adopting correcting amendments to the final rule published in the Federal Register on October 26, 2001, regarding international banking operations and the corresponding delegations of authority. The corrections clarify a number of provisions and correct a citation appearing in Subpart A, and restore a provision that was adopted in January 2001, but was inadvertently deleted from the rule. The correction appears in the November 27, 2001, edition of the Federal Register.

Additional Information

All circulars and documents are available on the Internet through the Federal Reserve Bank of San Francisco's Internet site, at http://www.frbsf.org/banking/letters. Paper copies of the Board's notices (Dockets R-1117 and R-0994) are available from our Corporate Services Department. To request copies to be sent by mail, please call (415) 974-2060.

For additional information about risk-based capital guidelines (R-1117), please contact our Banking Supervision and Regulation Department at (415) 974-3007.

For additional information about the corrections to the international banking operations amendments (R-0994), please contact our Banking Supervision and Regulation Department at (213) 683-2735.

FEDERAL RESERVE BANK OF SAN FRANCISCO