§217.100. Purpose, applicability, and principle of conservatism.
12 C.F.R. § 217.100
Purpose. This subpart E establishes:
Minimum qualifying criteria for Board-regulated institutions using institution-specific internal risk measurement and management processes for calculating risk-based capital requirements; and
Methodologies for such Board-regulated institutions to calculate their total risk-weighted assets.
Applicability.
This subpart applies to:
A top-tier bank holding company or savings and loan holding company domiciled in the United States that:
Is not a consolidated subsidiary of another bank holding company or savings and loan holding company that uses this subpart to calculate its risk-based capital requirements; and
That— (1) Is identified as a global systemically important BHC pursuant to § 217.402;
(2) Is identified as a Category II banking organization pursuant to 12 CFR 252.5 or 12 CFR 238.10; or
(3) Has a subsidiary depository institution that is required, or has elected, to use 12 CFR part 3, subpart E (OCC), this subpart (Board), or 12 CFR part 324, subpart E (FDIC), to calculate its risk-based capital requirements;
A state member bank that—
Is a subsidiary of a global systemically important BHC;
Is a Category II Board-regulated institution;
Is a subsidiary of a depository institution that uses 12 CFR part 3, subpart E (OCC), this subpart (Board), or 12 CFR part 324, subpart E (FDIC), to calculate its risk-based capital requirements; or
Is a subsidiary of a bank holding company or savings and loan holding company that uses this subpart to calculate its risk-based capital requirements; or
Any Board-regulated institution that elects to use this subpart to calculate its risk-based capital requirements.
A market risk Board-regulated institution must exclude from its calculation of risk-weighted assets under this subpart the risk-weighted asset amounts of all covered positions, as defined in subpart F of this part (except foreign exchange positions that are not trading positions, over-the-counter derivative positions, cleared transactions, and unsettled transactions).
Principle of conservatism. Notwithstanding the requirements of this subpart, a Board-regulated institution may choose not to apply a provision of this subpart to one or more exposures provided that:
The Board-regulated institution can demonstrate on an ongoing basis to the satisfaction of the Board that not applying the provision would, in all circumstances, unambiguously generate a risk-based capital requirement for each such exposure greater than that which would otherwise be required under this subpart;
The Board-regulated institution appropriately manages the risk of each such exposure;
The Board-regulated institution notifies the Board in writing prior to applying this principle to each such exposure; and
The exposures to which the Board-regulated institution applies this principle are not, in the aggregate, material to the Board-regulated institution.
Notes, amendments, and revision history
Amendments
[Reg. Q, 78 FR 62157, 62285, Oct. 11, 2013, as amended at 78 FR 62288, Oct. 11, 2013; 80 FR 41419, July 15, 2015; 84 FR 59271, Nov. 1, 2019]
Authority
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1462a, 1467a, 1818, 1828, 1831n, 1831o, 1831p-1, 1831w, 1835, 1844(b), 1851, 3904, 3906-3909, 4808, 5365, 5368, 5371, 5371 note, and sec. 4012, Pub. L. 116-136, 134 Stat. 281.
Source
Source: Reg. Q, 78 FR 62157, 62285, Oct. 11, 2013, unless otherwise noted.
Amendments
[Reg. Q, 78 FR 62157, 62285, Oct. 11, 2013, as amended at 78 FR 62288, Oct. 11, 2013; 80 FR 41419, July 15, 2015; 84 FR 59271, Nov. 1, 2019]