The FDIC today approved a joint agency proposal to exclude central bank deposits from the denominator of the supplementary leverage ratio for banking organizations predominantly engaged in custody banking activities. This proposal narrowly implements a section of the S. 2155 regulatory reform law that was enacted last year.
The American Bankers Association has long held that central bank deposits should be excluded from the leverage ratio for all banks and has further supported the OCC and Federal Reserve’s April 2018 proposal to recalibrate the “enhanced” SLR, which has not been finalized.
“This proposal acknowledges that low-risk central bank deposits should be excluded from the Supplementary Leverage Ratio for custodial banks. Going forward, ABA believes this exclusion should apply to all banks,” said ABA EVP Wayne Abernathy. “In addition, we are pleased to note that today’s action now allows the agencies to finalize their separate proposal to improve the ‘enhanced’ SLR, and we support them in that important work.” Comments on the proposal will be due in 60 days from publication in the Federal Register.