This PDF is the current document as it appeared on Public Inspection on 07/03/2017 at 08:45 am.
Section 622 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, implemented by the Board's Regulation XX, prohibits a merger or acquisition that would result in a financial company that controls more than 10 percent of the aggregate consolidated liabilities of all financial companies (“aggregate financial sector liabilities”). Specifically, an insured depository institution, a bank holding company, a savings and loan holding company, a foreign banking organization, any other company that controls an insured depository institution, and a nonbank financial company designated by the Financial Stability Oversight Council (each, a “financial company”) is prohibited from merging or consolidating with, acquiring all or substantially all of the assets of, or acquiring control of, another company if the resulting company's consolidated liabilities would exceed 10 percent of the aggregate financial sector liabilities.
Pursuant to Regulation XX, the Federal Reserve will publish the aggregate financial sector liabilities by July 1 of each year. Aggregate financial sector liabilities equals the average of the year-end financial sector liabilities figure (as of December 31) of each of the preceding two calendar years.
For Further Information Contact:
Sean Healey, Supervisory Financial Analyst, (202) 912-4611; Matthew Suntag, Senior Attorney, (202) 452-3694; for persons who are deaf or hard of hearing, TTY (202) 263-4869.
Aggregate Financial Sector Liabilities
Aggregate financial sector liabilities is equal to $21,010,053,985,500. This measure is in effect from July 1, 2017 through June 30, 2018.
Aggregate financial sector liabilities equals the average of the year-end financial sector liabilities figure (as of December 31) of each of the preceding two calendar years. The year-end financial sector liabilities figure equals the sum of the total consolidated liabilities of all top-tier U.S. financial companies and the U.S. liabilities of all top-tier foreign financial companies, calculated using the applicable methodology for each financial company, as set forth in Regulation XX and summarized below.
Consolidated liabilities of a U.S. financial company that was subject to consolidated risk-based capital rules as of December 31 of the year being measured, equal the difference between its risk-weighted assets (as adjusted upward to reflect amounts that are deducted from regulatory capital elements pursuant to the Federal banking agencies' risk-based capital rules) and total regulatory capital, as calculated under the applicable risk-based capital rules. For the year ending on December 31, 2016, companies in this category include (with certain exceptions listed below) bank holding companies, savings and loan holding companies, and insured depository institutions. The Federal Reserve used information collected on the Consolidated Financial Statements for Holding Companies (FR Y-9C) and the Bank Consolidated Reports of Condition and Income (Call Report) to calculate liabilities of these institutions.
Consolidated liabilities of a U.S. financial company not subject to consolidated risk-based capital rules as of December 31 of the year being measured, equal liabilities calculated in accordance with applicable accounting standards. For the year ending on December 31, 2016, companies in this category include nonbank financial companies supervised by the Board, bank holding companies and savings and loan holding companies subject to the Federal Reserve's Small Bank Holding Company Policy Statement, savings and loan holding companies substantially engaged in insurance underwriting or commercial activities, and U.S. companies that control depository institutions but are not bank holding companies or savings and loan holding companies. “Applicable accounting standards” is defined as GAAP, or such other accounting standard or method of estimation that the Board determines is appropriate. The Federal Reserve used information collected on the FR Y-9C, the Parent Company Only Financial Statements for Small Holding Companies (FR Y-9SP), and the Financial Company Report of Consolidated Liabilities (FR XX-1) to calculate liabilities of these institutions.
Section 622 provides that the U.S. liabilities of a “foreign financial company” equal the risk-weighted assets and regulatory capital attributable to the company's “U.S. operations.” Under Regulation XX, liabilities of a foreign banking organization's U.S. operations are calculated using the risk-weighted asset methodology for subsidiaries subject to risk-based capital rules, plus the assets of all branches, agencies, and nonbank subsidiaries, calculated in accordance with applicable accounting standards. Liabilities attributable to the U.S. operations of a foreign financial company that is not a foreign banking organization are calculated in a similar manner to the method described for foreign banking organizations, but liabilities of a U.S. subsidiary not subject to risk-based capital rules are calculated based on the U.S. Start Printed Page 31063subsidiary's liabilities under applicable accounting standards. The Federal Reserve used information collected on the Capital and Asset Report for Foreign Banking Organizations (FR Y-7Q), the FR Y-9C and the FR XX-1 to calculate liabilities of these institutions.
The Board granted a request from one financial company to use an accounting standard or method of estimation other than GAAP to calculate liabilities. The requesting company is an insurance company that reports financial information under Statutory Accounting Principles (“SAP”). The Board approved a method of estimation for this company that is based on line items from SAP reports, with adjustments to reflect certain differences in accounting treatment between GAAP and SAP.Start Signature
By order of the Board of Governors of the Federal Reserve System, acting through the Director of Supervision and Regulation under delegated authority, June 28, 2017.
Ann E. Misback,
Secretary of the Board.
2. This number reflects the average of the financial sector liabilities figure for the year ending December 31, 2015 ($21,940,911,695,000) and the year ending December 31, 2016 ($20,079,196,276,000). The decrease in liabilities between year-end 2015 and 2016 was primarily caused by the status change of General Electric Company and Metlife, Inc. As of year-end 2015, both companies met the definition of financial company under Regulation XX and were included in the financial sector liability calculation for that year. As of year-end 2016, neither General Electric Company nor Metlife, Inc. met the definition of financial company and, thus, both were excluded from the financial liability calculation. A further decrease in liabilities resulted from certain foreign banking organizations holding more risk-based capital against their U.S.-based assets in year-end 2016, compared to year-end 2015.Back to Citation
3. A financial company may request to use an accounting standard or method of estimation other than GAAP if it does not calculate its total consolidated assets or liabilities under GAAP for any regulatory purpose (including compliance with applicable securities laws). 12 CFR 251.3(e).Back to Citation
[FR Doc. 2017-14011 Filed 7-3-17; 8:45 am]
BILLING CODE 6210-01-P