The Office of the Comptroller of the Currency ("OCC") and the Board of Governors of the Federal Reserve System ("FRB") are seeking comments on a proposed rule to amend the standards for the enhanced supplementary leverage ratio ("eSLR").
The proposal would recalibrate and align the eSLR for global systemically important bank holding companies ("GSIBs") and also amend the corresponding total loss-absorbing capacity ("TLAC") requirements. Under current regulations, bank holding companies subject to the eSLR are also restricted by a fixed leverage standard that does not consider the size of their systemic footprint. The proposal offers more flexibility by linking the standard to the risk-based capital surcharge of the company. Additionally, the OCC and FRB may apply the eSLR standard as a capital buffer requirement. Considering the capital buffer requirements, the OCC and FRB project that the required tier 1 capital across GSIBs would be reduced by around $400 million.
FRB requested comments on any aspect of the proposed changes including (i) impacts of the proposed calibration of eSLR standards, (ii) possible alternative methods for determining the company-specific eSLR standards, (iii) alternatives that could reduce the "bindingness" of leverage requirements, (iv) potential application of the eSLR standard as a capital buffer requirement, and (v) potentially recalibrating the minimum leverage-based TLAC requirement to align with the proposed eSLR recalibration.
Comments must be received within 30 days of publication of the FRB notice in the Federal Register.
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