WASHINGTON -- Some banks may be required to hold more capital to cover the risks of nontraditional activities, including derivatives, under new rules adopted by federal regulators last week.
The rules, adopted by the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corp., will go into effect on Jan. 17, a comptroller's office attorney said.
"Basically, [they] amend the bank capital rule to make clear that the agencies may require additional capital specifically for concentrations of credit and nontraditional activity," the attorney said.
The rules give regulators authority to look at each type of transaction and require more capital if they determine it is necessary.
"I think the focus of this rule, while it certainly would encompass derivatives, was probably meant to be a little bit broader," the attorney said. "It wasn't specifically tailored for any particular derivatives type transaction."
The rule wouldn't automatically impose more capital requirements, officials said. Regulators will be able to review banking activities on a case-by-case basis and require more capital for specific transactions.
"It's by no means an explicit automatic capital charge for derivatives," the attorney said.
The rules first went out for comment earlier this year in an attempt to implement new authority granted under the Federal Deposit Insurance Corporation Improvement Act of 1991. Under that act, banking agencies were given the authority to review their risk-based capital standards for insured depository institutions.
The final rule amends the risk-based capital standards by explicitly identifying concentration of credit risk and risks of non-traditional activities and taking into account a bank's ability to manage risks.
