Notice2023-12389
Announcement of Financial Sector Liabilities
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 12, 2023
Issuing agencies
Federal Reserve System
Full Text
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<title>Federal Register, Volume 88 Issue 112 (Monday, June 12, 2023)</title>
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[Federal Register Volume 88, Number 112 (Monday, June 12, 2023)]
[Notices]
[Pages 38054-38055]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-12389]
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FEDERAL RESERVE SYSTEM
[Docket No. OP-1808]
Announcement of Financial Sector Liabilities
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'').\1\ 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.\2\
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\1\ Regulation XX implements section 622 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act. See 12 U.S.C. 1852.
\2\ 12 U.S.C. 1852(a)(2), (b); 12 CFR 251.3.
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Under Regulation XX, the Federal Reserve will publish the aggregate
financial sector liabilities by July 1 of each year. Aggregate
financial sector liabilities are equal to 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: Lesley Chao, Lead Financial
Institution Policy Analyst, (202) 974-7063; Shooka Saket, Financial
Institution Policy Analyst, (202) 452-3869; Matthew Suntag, Senior
Counsel, (202) 452-3694; Laura Bain, Senior Counsel, (202) 736-5546;
for users of telephone systems via text telephone (TTY) or any TTY-
based Telecommunications Relay Services (TRS), please call 711 from any
telephone, anywhere in the United States; Board of Governors of the
Federal Reserve System, 20th and C Streets NW, Washington, DC 20551.
Aggregate Financial Sector Liabilities
``Aggregate financial sector liabilities'' is equal to
$23,694,977,610,000.\3\ This measure is in effect from July 1, 2023
through June 30, 2024.
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\3\ This number reflects the average of the financial sector
liabilities figure for the years ending December 31, 2021
($23,469,486,089,000) and December 31, 2022 ($23,920,469,131,000).
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Calculation Methodology
The aggregate financial sector liabilities measure 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 the U.S.
financial company's 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.\4\ 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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\4\ 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 were insurance
companies that reported financial information under Statutory
Accounting Principles (``SAP''), and one was a foreign company that
controlled a U.S. industrial loan company that reported 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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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 the risk-based capital
rule, plus the assets of all branches, agencies, and nonbank
subsidiaries, calculated in accordance with applicable accounting
standards.
[[Page 38055]]
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, and 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 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.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2023-12389 Filed 6-9-23; 8:45 am]
BILLING CODE P
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