Agencies – Final Rule – Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations; Total Loss-absorbing Capacity Requirements (TLAC)

January 6, 2021 – The Agencies are adopting a Final Rule that applies to advanced approaches banking organizations with the aim of reducing both interconnectednesses within the financial system and systemic risks. The final rule requires deduction from a banking organization’s regulatory capital for certain investments in unsecured debt instruments issued by foreign or the U.S. global systemically important banking organizations (GSIBs) for the purposes of meeting minimum Total Loss-Absorbing Capacity (TLAC) requirements and, where applicable, long-term debt requirements, or for investments in unsecured debt instruments issued by GSIBs that are pari passu or subordinated to such debt instruments. In addition, the FRB is adopting changes to its TLAC rules to clarify requirements and correct drafting errors.

The Final Rule is effective on April 1, 2021.

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