Voglio sapere a riguardo di…

15078

Federal Register / Vol. 86, No. 53 / Monday, March 22, 2021 / Rules and Regulations
Preferred Stock and Subordinated Debt.8
As described in the terms published by Treasury, Senior Preferred Stock issued under ECIP will be noncumulative, perpetual preferred stock that is senior to the issuers common stock and pari passu with or, in some cases, senior to the issuers most senior class of existing preferred stock. Subordinated Debt issued under ECIP will be unsecured subordinated debt. The Subordinated Debt will rank junior to all other debt of the issuer except that it will rank senior to mutual capital certificates or similar instruments issued by a mutual banking organization and to any equity instruments issued by an S corporation.
Under the terms of Senior Preferred Stock, participating eligible banking organizations will not be required to pay dividends until two years after issuance of the Senior Preferred Stock, and then will be subject to a noncumulative dividend with a rate not to exceed 2
percent that may fluctuate based on certain lending growth criteria applied to the issuer. A participating eligible banking organization is prohibited from paying dividends under certain circumstances, including if the participating eligible banking organization determines that the payment would be detrimental to the financial health of the institution. Under the terms of the Subordinated Debt, interest payments on the Subordinated Debt would be subject to determinants and constraints similar to those described above, but the interest payments would be cumulative and deferrable.
The Act requires Treasury to establish restrictions on executive compensation, share buybacks, and dividend payments for issuers of capital instruments issued under ECIP, as well as restrictions on conflicts of interest.9 The Act permits Treasury to establish other terms and conditions for participation in ECIP. On March 4, 2021, Treasury issued an interim final rule that established restrictions on executive compensation, capital distributions, and luxury expenditures for ECIP.10

jbell on DSKJLSW7X2PROD with RULES

II. Discussion The Senior Preferred Stock and Subordinated Debt will feature 8 The term sheets for the Senior Preferred Stock and Subordinated Debt may be found on Treasurys website. For a complete description of the terms of the instruments, see https home.treasury.gov/
policy-issues/cares/emergency-capital-investmentprogram.
9 Section 104Ah of the Act.
10 See Emergency Capital Investment Program Restrictions on Executive Compensation, Share Buybacks, and Dividends, https
home.treasury.gov/system/files/136/ECIP-interimfinal-rule.pdf.

VerDate Sep<11>2014

16:10 Mar 19, 2021

Jkt 253001

characteristics that are similar to those of instruments that qualify under the agencies capital rule as additional tier 1 capital and tier 2 capital, respectively.
As discussed above, the Act directs the Secretary of the Treasury to seek to establish the terms of the Senior Preferred Stock to enable these instruments to receive Tier 1 capital treatment. Further, the establishment of ECIP and the capital investments being made thereunder help support the efforts of lowand moderate-income community financial institutions to provide financial intermediary services in low-income and underserved communities. To facilitate implementation of ECIP, the agencies are revising the capital rule to provide that the Senior Preferred Stock will qualify as additional tier 1 capital and Subordinated Debt will qualify as tier 2
capital.11 12 These revisions are based on the terms and conditions of the Senior Preferred Stock and Subordinated Debt provided in the Senior Preferred Stock term sheet and the Subordinated Debt term sheet published by the U.S.
Department of the Treasury on March 4, 2021. If the terms and conditions for the Senior Preferred Stock or Subordinated Debt are modified in the future such that they differ materially from the terms and conditions provided in the term sheets, the agencies may reevaluate whether such capital treatment remains appropriate.
In addition, the OCC is adding language to its licensing rule, which sets forth certain requirements applicable to subordinated debt issued by a national bank. Paragraph d2 of section 5.47
prohibits a national bank from including in a subordinated debt note any provision or covenant that unduly restricts or otherwise acts to unduly limit the authority of a national bank or interferes with the OCCs supervision of the national bank. To facilitate the ability of a national bank to issue subordinated debt through ECIP, the OCC is adding new paragraph j to section 5.47. This new paragraph clarifies that provisions and covenants 11 See 12 CFR 3.20 OCC; 12 CFR 217.20 Board;
12 CFR 324.20 FDIC.
12 Certain small bank holding companies and savings and loan holdings companies are subject to the Boards Small Bank Holding Company and Savings and Loan Holding Company Policy Statement 12 CFR part 225, app. C rather than the Boards capital rule. The Policy Statement requires subject companies to maintain specified debt-toequity ratios and specifies how certain types of debt instruments and preferred stock instruments are to be included for purposes of the debt-to-equity ratios. For purposes of the Policy Statement, Senior Preferred Stock issued under ECIP is redeemable preferred stock, which is subject to certain limitations under the Policy Statement, and Subordinated Debt issued under ECIP is debt.

PO 00000

Frm 00010

Fmt 4700

Sfmt 4700

added to a subordinated debt document pursuant to requirements imposed by the Treasury Department for purposes of ECIP will not be considered, under paragraph d2 of section 5.47, to unduly restrict or otherwise act to unduly limit the authority of a national bank or interfere with the OCCs supervision of the national bank.
III. Request for Comment The agencies seek comment on all aspects of this interim final rule. In particular, the agencies seek comment on the regulatory capital treatment of the Senior Preferred Stock and Subordinated Debt issued under ECIP
and on the following specific question:
Question: For banking organizations subject to the Boards Small Bank Holding Company and Savings and Loan Holding Company Policy Statement, what are the advantages and disadvantages of including Senior Preferred Stock as equity and Subordinated Debt as debt for purposes of meeting the debt-to-equity ratio?
What are the advantages and disadvantages of including Senior Preferred Stock subject to the limits described in the Policy Statement as redeemable preferred stock? What are the advantages and disadvantages of excluding Subordinated Debt from debt for purposes of the debt-to-equity ratio?
IV. Administrative Law Matters A. Administrative Procedure Act The agencies are issuing the interim final rule without prior notice and the opportunity for public comment and the 30-day delayed effective date ordinarily prescribed by the Administrative Procedure Act APA.13 Pursuant to section 553bB of the APA, general notice and the opportunity for public comment are not required with respect to a rulemaking when an agency for good cause finds and incorporates the finding and a brief statement of reasons therefore in the rules issued that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 14
As discussed above, the purpose of capital investments made under ECIP is to support the efforts of lowand moderate-income community financial institutions and the communities they serve, which may be disproportionately impacted by the economic effects of the COVID19 event. The Act also requires Treasury to seek to establish the terms of senior preferred stock instruments issued under the Program such that these instruments would be considered 13 5
14 5

U.S.C. 553.
U.S.C. 553bB.

E:FRFM22MRR1.SGM

22MRR1