[Federal Register Volume 84, Number 129 (Friday, July 5, 2019)]
[Notices]
[Pages 32169-32170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14288]
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FEDERAL RESERVE SYSTEM
[Docket No. OP-1666]
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, Lead Financial
Institution Policy Analyst, (202) 912-4611; Matthew Suntag, Counsel,
(202) 452-3694; for the hearing impaired, TTY (202) 263-4869.
Aggregate Financial Sector Liabilities
Aggregate financial sector liabilities is equal to
$20,664,262,842,000.\2\ This measure is in effect from July 1, 2019
through June 30, 2020.
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\2\ This number reflects the average of the financial sector
liabilities figure for the year ending December 31, 2017
($20,487,047,614,000) and the year ending December 31, 2018
($20,841,478,070,000).
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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. 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.
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. 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 insured
depository institutions but are not bank holding companies or savings
and loan holding companies. ``Applicable accounting standards'' is
defined as Generally Accepted Accounting Principles (``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). In previous years, the Board
received and approved requests from eleven financial companies to
use an accounting standard or method of estimation other than GAAP
to calculate liabilities. Ten of the companies are insurance
companies that report financial information under Statutory
Accounting Principles (``SAP''), and one is 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-based 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. Such companies that continue to be subject
to Regulation XX continue to use the previously approved methods.
The Board did not receive any new requests this year.
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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-
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weighted asset methodology for subsidiaries subject to the risk-based
capital rule, 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 the risk-based capital rule 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), the FR Y-9C, and
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the FR XX-1 to calculate liabilities of these institutions.
By order of the Board of Governors of the Federal Reserve
System, acting through the Director of Supervision and Regulation
under delegated authority, June 27, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-14288 Filed 7-3-19; 8:45 am]
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