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12 CFR Ch. I (1–1–21 Edition)

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12 CFR Ch. I (1–1–21 Edition) Comptroller of the Currency, Treasury Pt. 3 be consistent with the requirements agreeing to compensate the bank for and principles of this section. the use of its premises, employees, or (b) It is an unsafe and unsound prac- good will. However, the employee, offi- tice for any director, officer, employee, cer, director, or principal shareholder or principal shareholder of a national shall turn over to the bank as com- bank (including any entity in which pensation all income received from the this person owns an interest of more sale of the credit life insurance to the than ten percent), who is involved in bank’s loan customers. the sale of credit life insurance to loan (b) Income derived from credit life in- customers of the national bank, to surance sales to loan customers may be take advantage of that business oppor- credited to an affiliate operating under tunity for personal profit. Rec- the Bank Holding Company Act of 1956, ommendations to customers to buy in- surance should be based on the benefits 12 U.S.C. 1841 et seq., or to a trust for of the policy, not the commissions re- the benefit of all shareholders, pro- ceived from the sale. vided that the bank receives reasonable (c) Except as provided in §§ 2.4 and compensation in recognition of the role 2.5(b), and paragraph (d) of this section, played by its personnel, premises, and a director, officer, employee, or prin- good will in credit life insurance sales. cipal shareholder of a national bank, or Reasonable compensation generally an entity in which such person owns an means an amount equivalent to at interest of more than ten percent, may least 20 percent of the affiliate’s net in- not retain commissions or other in- come attributable to the bank’s credit come from the sale of credit life insur- life insurance sales. ance in connection with any loan made by that bank, and income from credit PART 3—CAPITAL ADEQUACY life insurance sales to loan customers STANDARDS must be credited to the income ac- counts of the bank. (d) The requirements of paragraph (c) Subpart A—General Provisions of this section do not apply to a direc- Sec. tor, officer, employee, or principal 3.1 Purpose, applicability, reservations of shareholder if: authority, and timing. (1) The person is employed by a third 3.2 Definitions. party that has contracted with the 3.3 Operational requirements for certain ex- bank on an arm’s-length basis to sell posures. financial products on bank premises; 3.4–3.9 [Reserved] and (2) The person is not involved in the Subpart B—Capital Ratio Requirements bank’s credit decision process. and Buffers § 2.4 Bonus and incentive plans. 3.10 Minimum capital requirements. 3.11 Capital conservation buffer and coun- A bank employee or officer may par- tercyclical capital buffer amount. ticipate in a bonus or incentive plan 3.12 Community bank leverage ratio frame- based on the sale of credit life insur- work. ance if payments to the employee or of- 3.13–3.19 [Reserved] ficer in any one year do not exceed the greater of: Subpart C—Definition of Capital (a) Five percent of the recipient’s an- nual salary; or 3.20 Capital components and eligibility cri- (b) Five percent of the average salary teria for regulatory capital instruments. of all loan officers participating in the 3.21 Minority interest. plan. 3.22 Regulatory capital adjustments and de- ductions. § 2.5 Bank compensation. 3.23–3.29 [Reserved] (a) Nothing contained in this part Subpart D—Risk-Weighted Assets— prohibits a bank employee, officer, di- Standardized Approach rector, or principal shareholder who holds an insurance agent’s license from 3.30 Applicability. 15 VerDate Sep<11>2014 16:17 Mar 19, 2021 Jkt 253035 PO 00000 Frm 00025 Fmt 8010 Sfmt 8010 Q:\12\12V1.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Pt. 3 12 CFR Ch. I (1–1–21 Edition) RISK-WEIGHTED ASSETS FOR GENERAL CREDIT RISK-WEIGHTED ASSETS FOR GENERAL CREDIT RISK RISK 3.31 Mechanics for calculating risk-weight- 3.131 Mechanics for calculating total whole- ed assets for general credit risk. sale and retail risk-weighted assets. 3.32 General risk weights. 3.132 Counterparty credit risk of repo-style 3.33 Off-balance sheet exposures. transactions, eligible margin loans, and 3.34 Derivative contracts. OTC derivative contracts. 3.35 Cleared transactions. 3.133 Cleared transactions. 3.36 Guarantees and credit derivatives: Sub- 3.134 Guarantees and credit derivatives: PD stitution treatment. substitution and LGD adjustment ap- 3.37 Collateralized transactions. proaches. 3.135 Guarantees and credit derivatives: RISK-WEIGHTED ASSETS FOR UNSETTLED Double default treatment. TRANSACTIONS 3.136 Unsettled transactions. 3.38 Unsettled transactions. 3.137–3.140 [Reserved] 3.39–3.40 [Reserved] RISK-WEIGHTED ASSETS FOR SECURITIZATION RISK-WEIGHTED ASSETS FOR SECURITIZATION EXPOSURES EXPOSURES 3.141 Operational criteria for recognizing 3.41 Operational requirements for the transfer of risk. securitization exposures. 3.142 Risk-weighted assets for securitization 3.42 Risk-weighted assets for securitization exposures. exposures. 3.143 Supervisory formula approach (SFA). 3.43 Simplified supervisory formula ap- 3.144 Simplified supervisory formula ap- proach (SSFA) and the gross-up ap- proach (SSFA). proach. 3.145 Recognition of credit risk mitigants 3.44 Securitization exposures to which the for securitization exposures. SSFA and gross-up approach do not 3.146–3.150 [Reserved] apply. 3.45 Recognition of credit risk mitigants for RISK-WEIGHTED ASSETS FOR EQUITY securitization exposures. EXPOSURES 3.46–3.50 [Reserved] 3.151 Introduction and exposure measure- ment. RISK-WEIGHTED ASSETS FOR EQUITY 3.152 Simple risk weight approach (SRWA). EXPOSURES 3.153 Internal models approach (IMA). 3.51 Introduction and exposure measure- 3.154 Equity exposures to investment funds. ment. 3.155 Equity derivative contracts. 3.52 Simple risk-weight approach (SRWA). 3.156–3.160 [Reserved] 3.53 Equity exposures to investment funds. 3.54–3.60 [Reserved] RISK-WEIGHTED ASSETS FOR OPERATIONAL RISK DISCLOSURES 3.161 Qualification requirements for incor- 3.61 Purpose and scope. poration of operational risk mitigants. 3.62 Disclosure requirements. 3.162 Mechanics of risk-weighted asset cal- 3.63 Disclosures by national banks or Fed- culation. eral savings associations described in 3.163–3.170 [Reserved] § 3.61. 3.64–3.99 [Reserved] DISCLOSURES 3.171 Purpose and scope. Subpart E—Risk-Weighted Assets—Internal 3.172 Disclosure requirements. Ratings-Based and Advanced Meas- 3.173 Disclosures by certain advanced ap- urement Approaches proaches national banks or Federal sav- ings associations and Category III na- 3.100 Purpose, applicability, and principle of tional banks or Federal savings associa- conservatism. tions. 3.101 Definitions. 3.174–3.200 [Reserved] 3.102–3.120 [Reserved] QUALIFICATION Subpart F—Risk-Weighted Assets—Market Risk 3.121 Qualification process. 3.122 Qualification requirements. 3.201 Purpose, applicability, and reservation 3.123 Ongoing qualification. of authority. 3.124 Merger and acquisition transitional 3.202 Definitions. arrangements. 3.203 Requirements for application of this 3.125–3.130 [Reserved] subpart F. 16 VerDate Sep<11>2014 16:17 Mar 19, 2021 Jkt 253035 PO 00000 Frm 00026 Fmt 8010 Sfmt 8010 Q:\12\12V1.TXT PC31 kpayne on VMOFRWIN702 with $$_JOB Comptroller of the Currency, Treasury § 3.1 3.204 Measure for market risk. Subpart A—General Provisions 3.205 VaR-based measure. 3.206 Stressed VaR-based measure. 3.207 Specific risk. SOURCE: 78 FR 62157, 62273, Oct. 11, 2013, un- less otherwise noted. 3.208 Incremental risk. 3.209 Comprehensive risk. § 3.1 Purpose, applicability, reserva- 3.210 Standardized measurement method for tions of authority, and timing. specific risk. 3.211 Simplified supervisory formula ap- (a) Purpose. This part establishes proach (SSFA). minimum capital requirements and 3.212 Market risk disclosures. overall capital adequacy standards for 3.213–3.299 [Reserved] national banks and Federal savings as- sociations. This part does not apply to Subpart G—Transition Provisions Federal branches and agencies of for- eign banks. This part includes meth- 3.300 Transitions. 3.301 Current Expected Credit Losses odologies for calculating minimum (CECL) transition. capital requirements, public disclosure 3.302 Exposures related the Money Market requirements related to the capital re- Mutual Fund Liquidity Facility. quirements, and transition provisions 3.303 Temporary changes to the community for the application of this part. bank leverage ratio framework. (b) Limitation of authority. Nothing in 3.304 Temporary exclusions from total le- this part shall be read to limit the au- verage exposure. thority of the OCC to take action 3.305 Exposures related to the Paycheck under other provisions of law, includ- Protection Program Lending Facility. ing action to address unsafe or unsound practices or conditions, deficient cap- Subpart H—Establishment of Minimum ital levels, or violations of law or regu- Capital Ratios for an Individual Bank or lation, under section 8 of the Federal Individual Federal Savings Association Deposit Insurance Act. 3.401 Purpose and scope. (c) Applicability. Subject to the re- 3.402 Applicability. quirements in paragraphs (d) and (f) of 3.403 Standards for determination of appro- this section: priate individual minimum capital ra- (1) Minimum capital requirements and tios. overall capital adequacy standards. Each 3.404 Procedures. national bank or Federal savings asso- 3.405 Relation to other actions. ciation must calculate its minimum capital requirements and meet the Subpart I—Enforcement overall capital adequacy standards in 3.501 Remedies. subpart B of this part. (2) Regulatory capital. Each national Subpart J—Issuance of a Directive bank or Federal savings association must calculate its regulatory capital in 3.601 Purpose and scope.
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