The FDIC reminded bankers not subject to advanced approaches under Basel III that they may elect to exclude Accumulated Other Comprehensive Income from their Basel III regulatory capital calculations. The agency emphasized that this is a one-time election that must be made on Schedule RC-R of the March 31, 2015, Call Report.
Banks making this election must add to common equity tier 1 capital any net unrealized losses and subtract any net unrealized gains on available-for-sale debt securities, and they must include in common equity tier 1 capital any net unrealized losses on available-for-sale equity securities, the FDIC said.
ABA-led banker advocacy contributed to the regulators’ decision to move away from their original proposal that all banks run unrecognized gains and losses through capital.
Read the guidance.