Subordinated Debt

Forms and Documents

Document Name	Status
Signed Letter 12-5-14.pdf Supplementary Document	2014-12-05
1557-320 Emergency Request Fall 2014-2.doc Supporting Statement A	2014-12-15

IC Document Collections

IC ID	Document Title	Status
214041	12 CFR 5.47(d)(3)(ii)(C)	New
210312	12 CFR 5.47(g)(1)(ii)(A)	Modified

ICR Details

OMB Control No: 1557-0320	ICR Reference No: 201411-1557-003
Status: Historical Active	Previous ICR Reference No: 201406-1557-002
Agency/Subagency: TREAS/OCC	Agency Tracking No:
Title: Subordinated Debt
Type of Information Collection: Revision of a currently approved collection	Common Form ICR:  No
Type of Review Request: Emergency	Approval Requested By: 12/22/2014
OIRA Conclusion Action: Approved without change	Conclusion Date: 12/18/2014
	Date Received in OIRA: 12/05/2014
Terms of Clearance:

	Inventory as of this Action	Requested	Previously Approved
Expiration Date	06/30/2015	6 Months From Approved	10/31/2017
Responses	226	0	184
Time Burden (Hours)	260	0	239
Cost Burden (Dollars)	0	0	0

---

Abstract: On February 28, 2014, the OCC issued an interim final rule to bring its subordinated debt regulations in conformity with its revised capital rules. The interim final rule provided that all national banks now must receive prior OCC approval in order to prepay subordinated debt that is included in tier 2 capital, and certain banks must receive prior approval to prepay subordinated debt that is not included in tier 2 capital. If the prepayment is in the form of a call option and the subordinated debt is included in tier 2 capital, a national bank must submit the information required for general prepayment requests and also submit either: (1) a statement explaining why the bank believes that following the proposed prepayment the bank would continue to hold an amount of capital commensurate with its risk; or (2) a description of the replacement capital instrument that meets the criteria for tier 1 or tier 2 capital, including the amount of such instrument and the time frame for issuance. The interim final rule also provided that prepayment of subordinated debt securities or mandatorily redeemable preferred stock included in tier 2 capital by Federal savings associations requires prior OCC approval. If the prepayment is in the form of a call option, the information required for general prepayment requests must be submitted along with either: (1) a statement explaining why the Federal savings association believes that following the proposed prepayment the savings association would continue to hold an amount of capital commensurate with its risk; or (2) a description of the replacement capital instrument that meets the criteria for tier 1 or tier 2 capital, including the amount of such instrument and the time frame for issuance. The OCC is issuing a second interim final rule further clarifying the subordinated debt rules. The interim final rule revises 12 CFR 5.47 to add a disclosure requirement in paragraph (d)(3)(ii)(C). A description must appear on the face of the subordinated debt note of the OCC's authority under 12 CFR 3.11 to limit distributions, including interest payments on any tier 2 capital instrument if the national bank has full discretion to permanently or temporarily suspend such payments without triggering an event of default.

Emergency Justfication: Subordinated debt plays a critical role in the capital and liquidity management of national banks. On February 28, 2014, the OCC published an interim final rule that, among other things, revised and clarified the OCC’s rules governing subordinated debt issued by national banks to make those rules consistent with the 2013 revised capital rules. This interim final rule makes crucial clarifications to those subordinated debt rules by moving certain provisions from the current Guidelines to the rules and making other clarifying and technical amendments. The underlying need for an interim final rule is driven by the fact that the 2013 revised capital rules will become applicable to non-advanced approaches national banks beginning January 1, 2015. Thus, it is imperative that the OCC issue this interim final rule with an effective date of January 1, 2015, in order to clarify for banks which requirements are applicable with respect to subordinated debt. Absent having these clarifying amendments in place and in effect by January 1, 2015, national banks may undergo great difficulty and expense ensuring that their subordinated debt satisfies all applicable rules and policies. This is particularly true for community banks.

---

Authorizing Statute(s): US Code: 12 USC 1 et seq. Name of Law: The National Bank Act
  

Citations for New Statutory Requirements: None

---

Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
1557-AD73	Final or interim final rulemaking	79 FR 75417	12/18/2014

---

Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? No

---

Number of Information Collection (IC) in this ICR: 2

IC Title	Form No.	Form Name
12 CFR 5.47(g)(1)(ii)(A)
12 CFR 5.47(d)(3)(ii)(C)

---

ICR Summary of Burden

	Total Approved	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	226	184	0	42	0	0
Annual Time Burden (Hours)	260	239	0	21	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Changing Regulations

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: The increase in burden is due to the addition of a new disclosure requirement.

---

Annual Cost to Federal Government:

Does this IC contain surveys, censuses, or employ statistical methods? No

Is the Supporting Statement intended to be a Privacy Impact Assessment required by the E-Government Act of 2002? No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? Uncollected

---

Common Form ICR:  No

---

On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 12/05/2014

---