The Federal Reserve has released an FAQ and two templates that mutual banks can use as they consider engaging in raising capital, Fed Vice Chair for Supervision Michelle Bowman announced today. (The FAQ can be found here, and the templates here and here.)
In a speech at the Fed’s Community Bank Conference, Bowman said the new resources are meant to provide options for mutual banks to issue capital instruments that could qualify as tier 1 common equity or as additional tier 1 equity.
“These approaches are just a start — we are open to further refinement and improvement once mutuals have an opportunity to review and work to implement this new approach,” Bowman said.
In a statement, American Bankers Association President and CEO Rob Nichols thanked Bowman for hosting the conference and her support for “recent changes designed to make it easier to launch and grow mutual institutions.”
“After today’s conference, we will be better prepared to work with the Fed, Treasury and all the banking agencies to create a regulatory framework that gives banks of all sizes the chance to compete and succeed today and into the future,” he said.
Mutual bankers meet with FDIC, OCC
In related news, ABA yesterday organized a group of more than 30 ABA mutual bank members, as well as representatives from the Independent Community Banks of America and America’s Mutual Banks, to meet with FDIC Acting Chair Hill and Office of the Comptroller of the Currency staff to advance core principles on mutual capital.
The principles list several regulatory and market objectives to help mutual banks, including establishing a consistent and efficient framework for mutual banks to raise CET1 or tier 1 capital, and promoting mutual capital instruments as strong, loss-absorbing Tier 1 capital.
