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FDIC Issues Final Rules on Deposit Insurance Pricing for Large Banks
Practical Law Legal Update 3-521-8040 (Approx. 2 pages)
FDIC Issues Final Rules on Deposit Insurance Pricing for Large Banks
by PLC Finance
| Published on 11 Oct 2012 • USA (National/Federal) |
The FDIC issued final rules on assessments and large bank pricing that amends and revises its final rules from February 2011.
On October 9, 2012, the FDIC adopted final rules to amend and clarify it's February 2011 final rules regarding definitions of certain high-risk assets used to determine deposit insurance premium assessment rates for depository institutions with more than $10 billion in assets (see Legal Update, FDIC Approves Final Rule on Deposit Insurance Assessments). They also clarify the timing as to when an asset must be classified as higher risk and how securitizations are identified as higher risk. The finals rules are generally effective April 1, 2013.
Among other things, the final rules:
- Revise the definitions of "higher-risk commercial and industrial loans and securities" and "higher-risk consumer loans." These revised definitions affect the higher-risk assets to Tier 1 capital and reserves ratio typically found in the large and highly complex institution scorecards.
- Incorporate new tests for the different higher-risk assets to make it easier for large banks to report their levels of these higher-risk loans. The tests will also help the FDIC determine whether to subject the banks to higher assessment rates.
These final rules came in response to concerns from the industry that they would not be able to report the necessary data consistent with the February 2011 rule definitions.
For more on the final rules, see the FDIC's Financial Institution Letter FIL-44-2012.