Federal Reserve Issues Final Regulations on Enhanced Prudential Standards for Foreign Banking Organizations
The Federal Reserve recently approved final rules that apply enhanced prudential standards to foreign banking organizations exceeding certain asset thresholds, constituting a significant overhaul to existing foreign bank supervision in the United States. The final rules implement a number of new requirements, including enhanced risk-based capital and leverage capital requirements, liquidity, risk management and stress testing requirements, a requirement to establish a U.S. intermediate holding company and a U.S. risk committee for certain FBOs, and a requirement to comply with a debt-to-equity limit for FBOs that have been determined to pose a grave threat to the financial stability of the United States.