June 6, 2024 - In December 2023, an interagency proposal was floated to increase the granularity in reporting exposure to nondepository financial institutions (NDFIs) on bank call reports. Its aim was to help the banking agencies better understand risks and performance and make reporting more consistent than it has been historically.

The proposal updated the forms with new line items to disaggregate reported data and capture items like off balance sheet transactions, non-domestic office exposure and loan performance data (e.g., nonaccruals and delinquencies), and would break out loans to mortgagers, commercial and consumer lenders and private equity funds.

The comment period ended February 26th, with an anticipated effective date of June 30th. The agencies received 39 comment letters (including four trade groups and 32 individuals), which generally supported the proposed new line items.

  • Four commenters requested additional instructions on how to report certain types of NDFIs.
  • Two commenters highlighted the need to ensure consistency in reporting these types of financial assets across other regulatory reports.
  • Thirty-one commenters indicated the proposal is a good starting point, but that it could be necessary to consider further disaggregation for users outside the agencies to better understand the NDFI exposure, risks, and performance trends.
  • Two commenters indicated more lead time was necessary for banks to properly implement the changes.

In light of the comments received, the agencies are moving forward with the proposed revisions with certain modifications:

  • More broadly defining NDFIs in order to clarify which types of NDFI exposures fall under the scope of the proposal and under which items certain types of loans involving NDFIs would be reported
  • Indicating that NDFIs include securitization vehicles, so that loans provided to these vehicles are included in the line item referencing other loans to NDFIs
  • Clarifying that the line item referencing “Loans to finance commercial real estate, construction, and land development activities (not secured by real estate)” will include loans to NDFIs and other loans
  • Revising the line item referencing “Loans for purchasing or carrying securities, including margin loans,“ to include all purpose and non-purpose securities-based margin loans, regardless of borrower type, that are predominantly secured (with a threshold of more than 50% of the underlying collateral) by securities with readily determinable fair values, to better clarify what constitutes margin lending   
  • Consolidating reporting of loans to U.S. and foreign NDFIs.

Comments on the revisions to the proposal are due by June 21st. The changes will take effect on December 31st, 2024.

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