[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)]
[Notices]
[Pages 45288-45289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16529]
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FEDERAL RESERVE SYSTEM
[Docket No. OP-1542]
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 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 financial sector liabilities by July 1 of each year.
Aggregate financial sector liabilities equals the average of the year-
end financial sector liabilities figure (as of December 31) of each of
the preceding two calendar years.
FOR FURTHER INFORMATION CONTACT: Sean Healey, Supervisory Financial
Analyst, (202) 912-4611; Matthew Suntag, Senior Attorney, (202) 452-
3694; for persons who are deaf or hard of hearing, TTY (202) 263-4869.
Aggregate Financial Sector Liabilities
Aggregate financial sector liabilities is equal to
$21,786,571,865,000.\2\ This measure is in effect from July 1, 2016
through June 30, 2017.
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\2\ This number reflects the average of the financial sector
liabilities figure for the year ending December 31, 2014
($21,632,232,035,000) and the year ending December 31, 2015
($21,940,911,695,000).
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Calculation Methodology
Aggregate financial sector liabilities equals the average of the
year-end financial sector liabilities figure (as of December 31) of
each of the preceding two calendar years. The year-end financial sector
liabilities figure equals the sum of the total consolidated liabilities
of all top-tier U.S. financial companies and the U.S. liabilities of
all top-tier foreign financial companies, calculated using the
applicable methodology for each financial company, as set forth in
Regulation XX and summarized below.
Consolidated liabilities of a U.S. financial company that was
subject to consolidated risk-based capital rules as of December 31 of
the year being measured, equal 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. For the year ending on
December 31, 2015, companies in this category include (with certain
exceptions listed below) bank holding companies, savings and loan
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.
[[Page 45289]]
Consolidated liabilities of a U.S. financial company not subject to
consolidated risk-based capital rules as of December 31 of the year
being measured, equal liabilities calculated in accordance with
applicable accounting standards. For the year ending on December 31,
2015, companies in this category include nonbank financial companies
supervised by the Board, bank holding companies and savings and loan
holding companies subject to the Federal Reserve's Small Bank Holding
Company Policy Statement, savings and loan holding companies
substantially engaged in insurance underwriting or commercial
activities, and U.S. companies that control depository institutions but
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.\3\ 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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\3\ 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 U.S. 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, 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, plus the assets of
all branches, agencies, and nonbank subsidiaries, calculated in
accordance with applicable accounting standards. 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.
The Board granted requests from three financial companies to use an
accounting standard or method of estimation other than GAAP to
calculate liabilities. All three companies were insurance companies
that report financial information under Statutory Accounting Principles
(``SAP''). The Board approved methods of estimation for these companies
that were based on line items from SAP reports, with adjustments to
reflect certain differences in accounting treatment between GAAP and
SAP.
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, June 28, 2016.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2016-16529 Filed 7-12-16; 8:45 am]
BILLING CODE 6210-01-P