WASHINGTON - Federal regulators announced Tuesday they approved Wells Fargo's process for complying with risk-based capital requirements under the "advanced approaches" framework of the international Basel III regime.
The Federal Reserve Board and Office of the Comptroller of the Currency said Wells can begin using the advanced approaches in the second quarter.
Under Basel III, certain large banking companies - those with more than $250 billion in assets or $10 billion in overseas exposures - can use a more complex system than other institutions to calculate their risk-based capital, utilizing the bank's own internal modeling. But regulators must be satisfied that a bank's internal process is sufficient before it can use the advanced framework.
For the bank to gain approval, the regulators' process and the bank's process are compared side-by-side for four consecutive quarters to observe whether there are any major discrepancies. Wells just completed its so-called "parallel run," culminating in the agencies' approval.
Wells joins eight other banks that were approved to use advanced approaches in February 2014 after completing parallel runs. Those banks are Citigroup, Goldman Sachs, JPMorgan Chase, Bank of New York Mellon, Morgan Stanley, Northern Trust, U.S. Bancorp and State Street.