District Circular Letters
August 7, 1998
REGULATIONS H & Y:
RISK-BASED CAPITAL GUIDELINES
To State Member Banks,
Bank Holding Companies,
and Others Concerned
in the Twelfth Federal Reserve District
Final Amendments to Capital Guidelines (Docket
R-0976)
The Federal Reserve Board, along with the Office of the Comptroller
of the Currency, the Federal Deposit Insurance Corporation, and the Office
of Thrift Supervision, has issued a final rule amending capital adequacy
standards for banks, bank holding companies, and savings associations
to address the regulatory capital treatment of servicing assets on both
mortgage assets and financial assets other than mortgages (nonmortgages).
The final rule is effective October 1, 1998. Banking
organizations may voluntarily apply the provisions of the final rule immediately
if they so desire.
The final rule
- Increases the maximum amount of servicing assets along with purchased
credit card relationships (PCCRs) that are includable in regulatory
capital from 50 percent to 100 percent of Tier 1 capital. Servicing
assets include the aggregate amount of mortgage servicing assets (MSAs)
and nonmortgage servicing assets (NMSAs).
- Applies a further sublimit of 25 percent of Tier 1 capital to the
aggregate amount of NMSAs and PCCRs and subjects the valuation of MSAs,
NMSAs, and PCCRs to a 10 percent discount.
- Modifies certain terms used in the banking agencies' capital rules
to be more consistent with the terminology found in accounting standards
recently prescribed by the Financial Accounting Standards Board for
reporting of these assets.
Copies
Copies of the Board's notice (Docket
R-0976) are available from our Corporate Services Department.
To request copies to be sent via mail, please call (415) 974-2748.
To request copies to be sent via fax, please call (415) 974-3333,
and specify document numbers 4166.
Additional Information
For additional information regarding the capital guidelines, please
contact our Banking Supervision and Regulation Department, at (415)
974-2927.
FEDERAL RESERVE BANK OF SAN FRANCISCO
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