On December 15, 2016, the US Federal Reserve Board issued a final rule establishing total loss absorbing capacity (TLAC) long- term debt (LTD), clean holding company requirements and regulatory capital deductions for US global systemically important banks (G-SIBs) and the US intermediate holding companies of non-US G-SIBs. While the final TLAC rule is largely consistent with the Federal Reserve Board's proposed rule issued in October 2015, the Federal Reserve Board made certain adjustments in the final rule in response to comments received. Notably, the Final Rule: (1) lowered certain of the TLAC and LTD requirements; (2) allows certain US intermediate holding companies to issue external LTD rather than require all such LTD to be issued to the foreign parent company or affiliate; (3) allows for the grandfathering of certain long-term debt including debt that was issued prior to December 31, 2016 and contained acceleration clauses or was governed by foreign law; and (4) removed the phase-in periods provided for under the proposed rule. Institutions that meet the relevant thresholds under the final rule would be required to comply with the requirements by January 1, 2019.
The final rule is available at: https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20161215a1.pdf.
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