(a) Capital conservation and countercyclical capital buffer. (1) From January 1, 2014 through December 31, 2015, a Board-regulated institution is not subject to limits on distributions and discretionary bonus payments under Sec. 217.11 of subpart B of this part notwithstanding the amount of its capital conservation buffer or any applicable countercyclical capital buffer amount.
(1) From January 1, 2014 through December 31, 2015, a Board-regulated institution is not subject to limits on distributions and discretionary bonus payments under Sec. 217.11 of subpart B of this part notwithstanding the amount of its capital conservation buffer or any applicable countercyclical capital buffer amount.
(2) Beginning January 1, 2016 through December 31, 2018 a Board-regulated institution's maximum payout ratio shall be determined as set forth in Table 1 to Sec. 217.300.
Table 1 to Sec. 217.300----------------------------------------------------------------------------------------------------------------
Maximum payout ratio (as
Transition period Capital conservation buffer a percentage of eligible
retained income)----------------------------------------------------------------------------------------------------------------Calendar year 2016.................... Greater than 0.625 percent (plus 25 percent of No payout ratio
any applicable countercyclical capital buffer limitation applies
amount). under this section.
Less than or equal to 0.625 percent (plus 25 60 percent.
percent of any applicable countercyclical
capital buffer amount), and greater than
0.469 percent (plus 17.25 percent of any
applicable countercyclical capital buffer
amount).
Less than or equal to 0.469 percent (plus 40 percent.
17.25 percent of any applicable
countercyclical capital buffer amount), and
greater than 0.313 percent (plus 12.5 percent
of any applicable countercyclical capital
buffer amount).
Less than or equal to 0.313 percent (plus 12.5 20 percent.
percent of any applicable countercyclical
capital buffer amount), and greater than
0.156 percent (plus 6.25 percent of any
applicable countercyclical capital buffer
amount).
Less than or equal to 0.156 percent (plus 6.25 0 percent.
percent of any applicable countercyclical
capital buffer amount).Calendar year 2017.................... Greater than 1.25 percent (plus 50 percent of No payout ratio
any applicable countercyclical capital buffer limitation applies
amount). under this section.
Less than or equal to 1.25 percent (plus 50 60 percent.
percent of any applicable countercyclical
capital buffer amount), and greater than
0.938 percent (plus 37.5 percent of any
applicable countercyclical capital buffer
amount).
Less than or equal to 0.938 percent (plus 37.5 40 percent.
percent of any applicable countercyclical
capital buffer amount), and greater than
0.625 percent (plus 25 percent of any
applicable countercyclical capital buffer
amount).
Less than or equal to 0.625 percent (plus 25 20 percent.
percent of any applicable countercyclical
capital buffer amount), and greater than
0.313 percent (plus 12.5 percent of any
applicable countercyclical capital buffer
amount).
Less than or equal to 0.313 percent (plus 12.5 0 percent.
percent of any applicable countercyclical
capital buffer amount).Calendar year 2018.................... Greater than 1.875 percent (plus 75 percent of No payout ratio
any applicable countercyclical capital buffer limitation applies
amount). under this section.
Less than or equal to 1.875 percent (plus 75 60 percent.
percent of any applicable countercyclical
capital buffer amount), and greater than
1.406 percent (plus 56.25 percent of any
applicable countercyclical capital buffer
amount).
Less than or equal to 1.406 percent (plus 40 percent.
56.25 percent of any applicable
countercyclical capital buffer amount), and
greater than 0.938 percent (plus 37.5 percent
of any applicable countercyclical capital
buffer amount).
Less than or equal to 0.938 percent (plus 37.5 20 percent.
percent of any applicable countercyclical
capital buffer amount), and greater than
0.469 percent (plus 18.75 percent of any
applicable countercyclical capital buffer
amount).
Less than or equal to 0.469 percent (plus 0 percent.
18.75 percent of any applicable
countercyclical capital buffer amount).----------------------------------------------------------------------------------------------------------------
(b) Regulatory capital adjustments and deductions. Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution must make the capital adjustments and deductions in Sec. 217.22 in accordance with the transition requirements in this paragraph (b). Beginning January 1, 2018, a Board-regulated institution must make all regulatory capital adjustments and deductions in accordance with Sec. 217.22.
(1) Transition deductions from common equity tier 1 capital. Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution, must make the deductions required under Sec. 217.22(a)(1)-(7) from common equity tier 1 or tier 1 capital elements in accordance with the percentages set forth in Table 2 and Table 3 to Sec. 217.300.
(i) A Board-regulated institution must deduct the following items from common equity tier 1 and additional tier 1 capital in accordance with the percentages set forth in Table 2 to Sec. 217.300: goodwill (Sec. 217.22(a)(1)), DTAs that arise from net operating loss and tax credit carryforwards (Sec. 217.22(a)(3)), a gain-on-sale in connection with a securitization exposure (Sec. 217.22(a)(4)), defined benefit pension fund assets (Sec. 217.22(a)(5)), expected credit loss that exceeds eligible credit reserves (for advanced approaches Board-regulated institutions that have completed the parallel run process and that have received notifications from the Board pursuant to Sec. 217.121(d) of subpart E) (Sec. 217.22(a)(6)), and financial subsidiaries (Sec. 217.22(a)(7)).
Table 2 to Sec. 217.300----------------------------------------------------------------------------------------------------------------
Transition deductions Transition deductions under Sec. 217.22(a)(3)-
under Sec. (6)
217.22(a)(1) and (7) ---------------------------------------------------
Transition period --------------------------
Percentage of the Percentage of the Percentage of the
deductions from common deductions from common deductions from tier 1
equity tier 1 capital equity tier 1 capital capital----------------------------------------------------------------------------------------------------------------Calendar year 2014................ 100 20 80Calendar year 2015................ 100 40 60Calendar year 2016................ 100 60 40Calendar year 2017................ 100 80 20Calendar year 2018, and thereafter 100 100 0----------------------------------------------------------------------------------------------------------------
(ii) A Board-regulated institution must deduct from common equity tier 1 capital any intangible assets other than goodwill and MSAs in accordance with the percentages set forth in Table 3 to Sec. 217.300.
(iii) A Board-regulated institution must apply a 100 percent risk-weight to the aggregate amount of intangible assets other than goodwill and MSAs that are not required to be deducted from common equity tier 1 capital under this section.
Table 3 to Sec. 217.300------------------------------------------------------------------------
Transition deductions under Sec.
Transition period 217.22(a)(2)--percentage of the deductions
from common equity tier 1 capital------------------------------------------------------------------------Calendar year 2014.......... 20Calendar year 2015.......... 40Calendar year 2016.......... 60Calendar year 2017.......... 80Calendar year 2018, and 100
thereafter.................------------------------------------------------------------------------
(2) Transition adjustments to common equity tier 1 capital. Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution, must allocate the regulatory adjustments related to changes in the fair value of liabilities due to changes in the Board-regulated institution's own credit risk (Sec. 217.22(b)(1)(iii)) between common equity tier 1 capital and tier 1 capital in accordance with the percentages set forth in Table 4 to Sec. 217.300.
(i) If the aggregate amount of the adjustment is positive, the Board-regulated institution must allocate the deduction between common equity tier 1 and tier 1 capital in accordance with Table 4 to Sec. 217.300.
(ii) If the aggregate amount of the adjustment is negative, the Board-regulated institution must add back the adjustment to common equity tier 1 capital or to tier 1 capital, in accordance with Table 4 to Sec. 217.300.
Table 4 to Sec. 217.300----------------------------------------------------------------------------------------------------------------
Transition adjustments under Sec. 217.22(b)(2)
-------------------------------------------------------------------------
Transition period Percentage of the adjustment
applied to common equity tier 1 Percentage of the adjustment
capital applied to tier 1 capital----------------------------------------------------------------------------------------------------------------Calendar year 2014.................... 20 80Calendar year 2015.................... 40 60Calendar year 2016.................... 60 40Calendar year 2017.................... 80 20Calendar year 2018, and thereafter.... 100 0----------------------------------------------------------------------------------------------------------------
(3) Transition adjustments to AOCI for an advanced approaches Board-regulated institution and a Board-regulated institution that has not made an AOCI opt-out election under Sec. 217.22(b)(2). Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution that has not made an AOCI opt-out election under Sec. 217.22(b)(2), and in each case through December 31, 2017, a Board-regulated institution must adjust common equity tier 1 capital with respect to the transition AOCI adjustment amount (transition AOCI adjustment amount):
(i) The transition AOCI adjustment amount is the aggregate amount of a Board-regulated institution's:
(A) Unrealized gains on available-for-sale securities that are preferred stock classified as an equity security under GAAP or available-for-sale equity exposures, plus
(B) Net unrealized gains or losses on available-for-sale securities that are not preferred stock classified as an equity security under GAAP or available-for-sale equity exposures, plus
(C) Any amounts recorded in AOCI attributed to defined benefit postretirement plans resulting from the initial and subsequent application of the relevant GAAP standards that pertain to such plans (excluding, at the Board-regulated institution's option, the portion relating to pension assets deducted under section 22(a)(5)), plus
(D) Accumulated net gains or losses on cash flow hedges related to items that are reported on the balance sheet at fair value included in AOCI, plus
(E) Net unrealized gains or losses on held-to-maturity securities that are included in AOCI.
(ii) A Board-regulated institution must make the following adjustment to its common equity tier 1 capital:
(A) If the transition AOCI adjustment amount is positive, the appropriate amount must be deducted from common equity tier 1 capital in accordance with Table 5 to Sec. 217.300.
(B) If the transition AOCI adjustment amount is negative, the appropriate amount must be added back to common equity tier 1 capital in accordance with Table 5 to Sec. 217.300.
Table 5 to Sec. 217.300------------------------------------------------------------------------
Percentage of the transition AOCI
Transition period adjustment amount to be applied to common
equity tier 1 capital------------------------------------------------------------------------Calendar year 2014.......... 80Calendar year 2015.......... 60Calendar year 2016.......... 40Calendar year 2017.......... 20Calendar year 2018 and 0
thereafter.................------------------------------------------------------------------------
(iii) A Board-regulated institution may include in tier 2 capital the percentage of unrealized gains on available-for-sale preferred stock classified as an equity security under GAAP and available-for-sale equity exposures as set forth in Table 6 to Sec. 217.300.
Table 6 to Sec. 217.300------------------------------------------------------------------------
Percentage of unrealized gains on
available-for-sale preferred stock
classified as an equity security under
Transition period GAAP and available-for-sale equity
exposures that may be included in tier 2
capital------------------------------------------------------------------------Calendar year 2014.......... 36Calendar year 2015.......... 27Calendar year 2016.......... 18Calendar year 2017.......... 9Calendar year 2018 and 0
thereafter.................------------------------------------------------------------------------
(4) Additional transition deductions from regulatory capital. (i) Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution, must use Table 7 to Sec. 217.300 to determine the amount of investments in capital instruments and the items subject to the 10 and 15 percent common equity tier 1 capital deduction thresholds (Sec. 217.22(d)) (that is, MSAs, DTAs arising from temporary differences that the Board-regulated institution could not realize through net operating loss carrybacks, and significant investments in the capital of unconsolidated financial institutions in the form of common stock) that must be deducted from common equity tier 1 capital.
(i) Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution, must use Table 7 to Sec. 217.300 to determine the amount of investments in capital instruments and the items subject to the 10 and 15 percent common equity tier 1 capital deduction thresholds (Sec. 217.22(d)) (that is, MSAs, DTAs arising from temporary differences that the Board-regulated institution could not realize through net operating loss carrybacks, and significant investments in the capital of unconsolidated financial institutions in the form of common stock) that must be deducted from common equity tier 1 capital.
(ii) Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution must apply a 100 percent risk-weight to the aggregate amount of the items subject to the 10 and 15 percent common equity tier 1 capital deduction thresholds that are not deducted under this section. As set forth in Sec. 217.22(d)(2), beginning January 1, 2018, a Board-regulated institution must apply a 250 percent risk-weight to the aggregate amount of the items subject to the 10 and 15 percent common equity tier 1 capital deduction thresholds that are not deducted from common equity tier 1 capital.
Table 7 to Sec. 217.300------------------------------------------------------------------------
Transitions for deductions under Sec.
217.22(c) and (d)--Percentage of
Transition period additional deductions from regulatory
capital------------------------------------------------------------------------Calendar year 2014.......... 20Calendar year 2015.......... 40Calendar year 2016.......... 60Calendar year 2017.......... 80Calendar year 2018 and 100
thereafter.................------------------------------------------------------------------------
(iii) For purposes of calculating the transition deductions in this paragraph (b)(4) beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution's 15 percent common equity tier 1 capital deduction threshold for MSAs, DTAs arising from temporary differences that the Board-regulated institution could not realize through net operating loss carrybacks, and significant investments in the capital of unconsolidated financial institutions in the form of common stock is equal to 15 percent of the sum of the Board-regulated institution's common equity tier 1 elements, after regulatory adjustments and deductions required under Sec. 217.22(a) through (c) (transition 15 percent common equity tier 1 capital deduction threshold).
(iv) Beginning January 1, 2018, a Board-regulated institution must calculate the 15 percent common equity tier 1 capital deduction threshold in accordance with Sec. 217.22(d).
(c) Non-qualifying capital instruments--(1) Depository institution holding companies with total consolidated assets of more than $15 billion as of December 31, 2009 that were not mutual holding companies prior to May 19, 2010. The transition provisions in this paragraph (c)(1) apply to debt or equity instruments that do not meet the criteria for additional tier 1 or tier 2 capital instruments in Sec. 217.20, but that were issued and included in tier 1 or tier 2 capital, respectively (or, in the case of a savings and loan holding company, would have been included in tier 1 or tier 2 capital if the savings and loan holding company had been subject to the general risk-based capital rules under 12 CFR part 225, appendix A), prior to May 19, 2010 (non-qualifying capital instruments), and that were issued by a depository institution holding company with total consolidated assets greater than or equal to $15 billion as of December 31, 2009 that was not a mutual holding company prior to May 19, 2010 (2010 MHC) (depository institution holding company of $15 billion or more).
(1) Depository institution holding companies with total consolidated assets of more than $15 billion as of December 31, 2009 that were not mutual holding companies prior to May 19, 2010. The transition provisions in this paragraph (c)(1) apply to debt or equity instruments that do not meet the criteria for additional tier 1 or tier 2 capital instruments in Sec. 217.20, but that were issued and included in tier 1 or tier 2 capital, respectively (or, in the case of a savings and loan holding company, would have been included in tier 1 or tier 2 capital if the savings and loan holding company had been subject to the general risk-based capital rules under 12 CFR part 225, appendix A), prior to May 19, 2010 (non-qualifying capital instruments), and that were issued by a depository institution holding company with total consolidated assets greater than or equal to $15 billion as of December 31, 2009 that was not a mutual holding company prior to May 19, 2010 (2010 MHC) (depository institution holding company of $15 billion or more).
(2) Mergers and acquisitions. (i) A depository institution holding company of $15 billion or more that acquires either a depository institution holding company with total consolidated assets of less than $15 billion as of December 31, 2009 (depository institution holding company under $15 billion) or a depository institution holding company that is a 2010 MHC, may include in regulatory capital the non-qualifying capital instruments issued by the acquired organization up to the applicable percentages set forth in Table 8 to Sec. 217.300.
(i) A depository institution holding company of $15 billion or more that acquires either a depository institution holding company with total consolidated assets of less than $15 billion as of December 31, 2009 (depository institution holding company under $15 billion) or a depository institution holding company that is a 2010 MHC, may include in regulatory capital the non-qualifying capital instruments issued by the acquired organization up to the applicable percentages set forth in Table 8 to Sec. 217.300.
(ii) If a depository institution holding company under $15 billion acquires a depository institution holding company under $15 billion or a 2010 MHC, and the resulting organization has total consolidated assets of $15 billion or more as reported on the resulting organization's FR Y-9C for the period in which the transaction occurred, the resulting organization may include in regulatory capital non-qualifying instruments of the resulting organization up to the applicable percentages set forth in Table 8 to Sec. 217.300.
Table 8 to Sec. 217.300------------------------------------------------------------------------
Percentage of non-qualifying capital
instruments includable in additional tier
Transition period (calendar 1 or tier 2 capital for a depository
year) institution holding company of $15 billion
or more------------------------------------------------------------------------Calendar year 2014.......... 50Calendar year 2015.......... 25Calendar year 2016 and 0
thereafter.................------------------------------------------------------------------------
(3) Transition adjustments to AOCI. From January 1, 2014 through December 31, 2017, a Board-regulated institution that has not made an AOCI opt-out election under Sec. 217.22(b)(2) must adjust common equity tier 1 capital with respect to the aggregate amount of unrealized gains on available-for-sale preferred stock classified as an equity security under GAAP and available-for-sale equity exposures, plus net unrealized gains or losses on available-for-sale securities that are not preferred stock classified as equity securities under GAAP or equity exposures, plus any amounts recorded in AOCI attributed to defined benefit postretirement plans resulting from the initial and subsequent application of the relevant GAAP standards that pertain to such plans (excluding, at the Board-regulated institution's option, the portion relating to pension assets deducted under Sec. 217.22(a)(5)), plus accumulated net unrealized gains or losses on cash flow hedges related to items that are reported on the balance sheet at fair value included in AOCI, plus net unrealized gains or losses on held-to-maturity securities that are included in AOCI (the transition AOCI adjustment amount) as reported on the Board-regulated institution's most recent Call Report, for a state member bank, or the FR Y-9C, for a bank holding company or savings and loan holding company, as applicable, as follows:
(i) Non-qualifying capital instruments issued by depository institution holding companies under $15 billion and 2010 MHCs prior to May 19, 2010 may be included in additional tier 1 or tier 2 capital if the instrument was included in tier 1 or tier 2 capital, respectively, as of January 1, 2014.
(ii) Non-qualifying capital instruments includable in tier 1 capital are subject to a limit of 25 percent of tier 1 capital elements, excluding any non-qualifying capital instruments and after applying all regulatory capital deductions and adjustments to tier 1 capital.
(iii) Non-qualifying capital instruments that are not included in tier 1 as a result of the limitation in paragraph (c)(3)(ii) of this section are includable in tier 2 capital.
(4) Depository institutions. (i) Beginning on January 1, 2014, a depository institution that is an advanced approaches Board-regulated institution, and beginning on January 1, 2015, all other depository institutions, may include in regulatory capital debt or equity instruments issued prior to September 12, 2010 that do not meet the criteria for additional tier 1 or tier 2 capital instruments in Sec. 217.20 but that were included in tier 1 or tier 2 capital respectively as of September 12, 2010 (non-qualifying capital instruments issued prior to September 12, 2010) up to the percentage of the outstanding principal amount of such non-qualifying capital instruments as of January 1, 2014 in accordance with Table 9 to Sec. 217.300.
(i) Beginning on January 1, 2014, a depository institution that is an advanced approaches Board-regulated institution, and beginning on January 1, 2015, all other depository institutions, may include in regulatory capital debt or equity instruments issued prior to September 12, 2010 that do not meet the criteria for additional tier 1 or tier 2 capital instruments in Sec. 217.20 but that were included in tier 1 or tier 2 capital respectively as of September 12, 2010 (non-qualifying capital instruments issued prior to September 12, 2010) up to the percentage of the outstanding principal amount of such non-qualifying capital instruments as of January 1, 2014 in accordance with Table 9 to Sec. 217.300.
(ii) Table 9 to Sec. 217.300 applies separately to tier 1 and tier 2 non-qualifying capital instruments.
(iii) The amount of non-qualifying capital instruments that cannot be included in additional tier 1 capital under this section may be included in tier 2 capital without limitation, provided that the instruments meet the criteria for tier 2 capital instruments under Sec. 217.20(d).
Table 9 to Sec. 217.300----------------------------------------------------------------------------------------------------------------
Percentage of non-qualifying capital
Transition period (calendar year) instruments includable in additional tier
1 or tier 2 capital---------------------------------------------------------------------------------------------------------------Calendar year 2014................................................ 80Calendar year 2015................................................ 70Calendar year 2016................................................ 60Calendar year 2017................................................ 50Calendar year 2018................................................ 40Calendar year 2019................................................ 30Calendar year 2020................................................ 20Calendar year 2021................................................ 10Calendar year 2022 and thereafter................................. 0----------------------------------------------------------------------------------------------------------------
(d) Minority interest--(1) Surplus minority interest. Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution may include in common equity tier 1 capital, tier 1 capital, or total capital the percentage of the common equity tier 1 minority interest, tier 1 minority interest and total capital minority interest outstanding as of January 1, 2014 that exceeds any common equity tier 1 minority interest, tier 1 minority interest or total capital minority interest includable under Sec. 217.21 (surplus minority interest), respectively, as set forth in Table 10 to Sec. 217.300.
(1) Surplus minority interest. Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution may include in common equity tier 1 capital, tier 1 capital, or total capital the percentage of the common equity tier 1 minority interest, tier 1 minority interest and total capital minority interest outstanding as of January 1, 2014 that exceeds any common equity tier 1 minority interest, tier 1 minority interest or total capital minority interest includable under Sec. 217.21 (surplus minority interest), respectively, as set forth in Table 10 to Sec. 217.300.
(2) Non-qualifying minority interest. Beginning January 1, 2014 for an advanced approaches Board-regulated institution, and beginning January 1, 2015 for a Board-regulated institution that is not an advanced approaches Board-regulated institution, and in each case through December 31, 2017, a Board-regulated institution may include in tier 1 capital or total capital the percentage of the tier 1 minority interest and total capital minority interest outstanding as of January 1, 2014 that does not meet the criteria for additional tier 1 or tier 2 capital instruments in Sec. 217.20 (non-qualifying minority interest), as set forth in Table 10 to Sec. 217.300.
Table 10 to Sec. 217.300------------------------------------------------------------------------
Percentage of the amount of surplus or non-
qualifying minority interest that can be
Transition period included in regulatory capital during the
transition period------------------------------------------------------------------------Calendar year 2014.......... 80Calendar year 2015.......... 60Calendar year 2016.......... 40Calendar year 2017.......... 20Calendar year 2018 and 0
thereafter.................------------------------------------------------------------------------
(e) Prompt corrective action. For purposes of 12 CFR part 208, subpart D, a Board-regulated institution must calculate its capital measures and tangible equity ratio in accordance with the transition provisions in this section.
(f) Until July 21, 2015, this part will not apply to any bank holding company subsidiary of a foreign banking organization that is currently relying on Supervision and Regulation Letter SR 01-01 issued by the Board (as in effect on May 19, 2010). [Reg. Q, 78 FR 62157 and 62285, Oct. 11, 2013, as amended at 78 FR 62290, Oct. 11, 2013]