Revised bank holding company rating system.
Under the revised rating system, each BHC is assigned a composite rating (C) based on an evaluation and rating of three essential components of an institution's financial condition and operations. These three components are: Risk Management (R); Financial Condition (F); and potential Impact (I) of the parent company and nondepository subsidiaries on the subsidiary depository institutions. A fourth rating, Depository Institution (D), mirrors the primary regulator's assessment of the subsidiary depository institutions. A simplified version of the rating system that includes only the R and C components will be applied to noncomplex bank holding companies with assets less than $1 billion.
To provide a consistent framework for assessing risk management, the R component is supported by four subcomponents that reflect the effectiveness of the banking organization's risk management and controls. The F component is supported by four subcomponents reflecting an assessment of the quality of the banking organization's Capital; Asset Quality; Earnings; and Liquidity.
The policy also contains guidance on implementation of the revised rating system based on BHC size and complexity.
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|Publication:||Federal Reserve Bulletin|
|Date:||Jan 1, 2005|
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