Prudential Regulators Finalize Supplementary Leverage Ratio Rule

FDIC Federal Reserve OCC

On September 3, the OCC, the FDIC, and the Federal Reserve Board released a final rule that modifies the definition of the denominator of the supplementary leverage ratio in a manner consistent with recent changes agreed to by the Basel Committee. The revisions to the supplementary leverage ratio apply to all banking organizations subject to the advanced approaches risk-based capital rule. The final rule modifies the methodology for including off-balance sheet items, including credit derivatives, repo-style transactions, and lines of credit, in the denominator of the supplementary leverage ratio. The final rule also requires institutions to calculate total leverage exposure using daily averages for on-balance sheet items and the average of three month-end calculations for off-balance sheet items. Certain public disclosures required by the final rule must be made starting in the first quarter of 2015, and the minimum supplementary leverage ratio requirement using the final rule’s denominator calculations is effective January 1, 2018.