Large Holding-Company, Large-Bank Prudential Framework

All of the U.S. banking agencies have adopted final versions of the “tailoring” standards proposed for domestic banking organizations with assets over $50 billion and for foreign banking organizations (FBOs) in 2018 without substantive change. The FRB has also adopted final standards mandated under the 2018 banking law largely as initially proposed. The FRB rules now also combine the tailoring standards the Board initially proposed on a stand-alone basis for FBOs.5 As a result of all of these rules, the capital, liquidity, stress-testing, risk-management, and related prudential standards for domestic banking organizations not designated as GSIBs with assets over $100 billion would be less demanding. FBOs with combined U.S. operations (CUSO) above $100 billion will also see their rules tailored based on size and complexity along with standards for intermediate holding companies (IHCs) with assets over $100 billion. Prudential standards for smaller and non-complex companies will be particularly favorable, enhancing the potential for greater capital retention or distribution along with technological innovation, M&A, or other expansions.