9th November 2018

Fed Board finalises new supervisory rating system for large banks

The Federal Reserve Board has finalised a new supervisory rating system for large financial institutions that is aligned with the core areas most important to supporting a large firm's safety and soundness and US financial stability.

The Board's post-crisis supervisory programme for large financial institutions focuses on capital, liquidity, and the effectiveness of its governance and controls. In each of those areas, supervisors will use the new rating system to assign a confidential rating to the firms.

The new rating system will apply to all domestic bank holding companies and non-insurance, non-commercial savings and loan holding companies with $100bn or more in total consolidated assets, which is a change from the $50bn threshold originally proposed. The new rating system will also apply to US intermediate holding companies of foreign banking organisations with $50bn or more in total consolidated assets as proposed.

The Federal Reserve will continue to apply its existing rating system for bank holding companies with less than $100bn in total consolidated assets. The existing rating system will also be adopted for non-insurance, non-commercial savings and loan holding companies with less than $100bn in total consolidated assets.