[Federal Register Volume 80, Number 129 (Tuesday, July 7, 2015)]
[Notices]
[Pages 38686-38687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16658]


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FEDERAL RESERVE SYSTEM

[Docket No. OP-1516]


Announcement of Financial Sector Liabilities

    Section 622 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, implemented by the Board's Regulation XX, prohibits a 
merger or acquisition that would result in a financial company that 
controls more than 10 percent of the aggregate consolidated liabilities 
of all financial companies (``aggregate financial sector 
liabilities''). Specifically, an insured depository institution, a bank 
holding company, a savings and loan holding company, a foreign banking 
organization, any other company that controls an insured depository 
institution, and a nonbank financial company designated by the 
Financial Stability Oversight Council (each, a ``financial company'') 
is prohibited from merging or consolidating with, acquiring all or 
substantially all of the assets of, or acquiring control of, another 
company (``covered acquisition'') if the resulting company's 
consolidated liabilities would exceed 10 percent of the aggregate 
financial sector liabilities.\1\
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    \1\ 12 U.S.C. 1852(a)(2), (b).
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    Pursuant to Regulation XX, the Federal Reserve will publish the 
aggregate consolidated liabilities of all financial companies by July 1 
of each year. For the first period (July 1, 2015-June 30, 2016), 
aggregate financial sector liabilities is equal to the financial sector 
liabilities calculated as of December 31, 2014. For all subsequent 
periods, aggregate financial sector liabilities will equal the average 
of the financial sector liabilities as of December 31 of each of the 
preceding two calendar years.

FOR FURTHER INFORMATION CONTACT: Felton Booker, Senior Supervisory 
Financial Analyst (202) 912-4651; Sean Healey, Senior Financial 
Analyst, (202) 912-4611; Christine Graham, Counsel, (202) 452-3005; 
Matthew Suntag, Senior Attorney, (202) 452-3694; for persons who are 
deaf or hard of hearing, TTY (202) 263-4869.

Aggregate Financial Sector Liabilities

    As of December 31, 2014, aggregate financial sector liabilities is 
equal to $21,632,232,035,000. This measure is in effect from July 1, 
2015 through June 30, 2016.

Calculation Methodology

    Aggregate financial sector liabilities equals the sum of the 
financial sector liabilities of all financial companies, calculated 
using the methodology set forth in Regulation XX and summarized below.
    Financial sector liabilities of a U.S. financial company that was 
subject to consolidated risk-based capital rules as of December 31, 
2014, equals the difference between its risk-weighted assets (as 
adjusted upward to reflect amounts that are deducted from regulatory 
capital elements pursuant to the Federal banking agencies' risk-based 
capital rules) and total regulatory capital, as calculated under the 
applicable risk-based capital rules. Companies in this category include 
bank holding companies and insured depository institutions. The Federal 
Reserve used information collected on the Consolidated Financial 
Statements for Holding Companies (FR Y-9C) and the Bank Consolidated 
Reports of Condition and Income (Call Report) to calculate liabilities 
of these institutions.
    Financial sector liabilities of a U.S. financial company that was 
not subject to consolidated risk-based capital rules as of December 31, 
2014, equal liabilities calculated in accordance with applicable 
accounting standards. Companies in this category include savings and 
loan holding companies, nonbank financial companies supervised by the 
Board, bank holding companies with total consolidated assets of less 
than $1 billion, and U.S. depository institution holding companies that 
are not bank holding companies or savings and loan holding companies. 
``Applicable accounting standards'' is defined as GAAP, or such other 
accounting standard or method of estimation that the Board determines 
is appropriate.\2\ The Federal Reserve used information collected on 
the FR Y-9C, the Parent Company Only Financial Statements for Small 
Holding Companies (FR Y-9SP), and the Financial Company Report of 
Consolidated Liabilities (FR XX-1) to calculate liabilities of these 
institutions.
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    \2\ A financial company may request to use an accounting 
standard or method of estimation other than GAAP if it does not 
calculate its total consolidated assets or liabilities under GAAP 
for any regulatory purpose (including compliance with applicable 
securities laws). 12 CFR 251.3(e).
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    Section 622 provides that the financial sector liabilities of a 
``foreign financial company'' equal the risk-weighted assets and 
regulatory capital attributable to the company's ``U.S. operations.'' 
Under Regulation XX, financial sector liabilities of a foreign banking 
organization's U.S. operations are calculated using the risk-weighted 
asset methodology for subsidiaries subject to risk-based capital rules, 
and applicable accounting standards for all branches, agencies, and 
nonbank subsidiaries. Financial sector liabilities attributable to the 
U.S. operations of a foreign financial company that is not a foreign 
banking organization are calculated in a similar manner to the method 
described for foreign banking organizations, but liabilities of a U.S. 
subsidiary not subject to risk-based capital rules are calculated based 
on the U.S. subsidiary's liabilities under applicable accounting 
standards. The Federal Reserve used information collected on the 
Capital and Asset Report for Foreign Banking Organizations (FR Y-7Q) 
and the FR XX-1 to calculate liabilities of these institutions.

[[Page 38687]]

    The Board granted requests from ten financial companies to use an 
accounting standard or method of estimation other than GAAP to 
calculate liabilities. Nine of the companies were insurance companies 
that report financial information under Statutory Accounting Principles 
(``SAP''), and one was a foreign company that controls a U.S. 
industrial loan company that reports financial information under 
International Financial Reporting Standards (``IFRS''). For the 
insurance companies, the Board approved a method of estimation that was 
based on line items from SAP reports, with adjustments to reflect 
certain differences in accounting treatment between GAAP and SAP. For 
the foreign company, the Board approved the use of IFRS.

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Director of the Division Banking 
Supervision and Regulation under delegated authority, July 1, 2015.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2015-16658 Filed 7-6-15; 8:45 am]
BILLING CODE 6210-01-P