Regulatory Capital: Category I and II Banking Organizations, Banking Organizations With Significant Trading Activity, and Optional Adoption for Other Banking Organizations

Summary

On March 19, 2026, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) issued a joint notice of proposed rulemaking to modernize the regulatory capital requirements applicable to Category I and II banking organizations and the market risk capital framework for banking organizations with significant trading activity. The proposal also allows for optional adoption by other banking organizations.

The proposed revisions would improve the calculation of risk-based capital requirements to better reflect the risks of these banking organizations’ exposures, reduce the complexity of the regulatory capital requirements, enhance the consistency of requirements across these banking organizations, and facilitate more effective supervisory and market assessments of capital adequacy. The proposal would be generally consistent with the international capital standards issued by the Basel Committee on Banking Supervision. Concurrently, the agencies are publishing a separate proposal, which would modify certain aspects of the regulatory capital rule that would generally apply to all other banking organizations.

The OCC encourages stakeholders to review the proposed rule and provide comments before the close of the comment period on June 18, 2026.

Highlights

• The proposal contains a new framework for calculating risk-weighted assets (referred to as “the expanded risk-based approach” or ERBA) that would apply to Category I and II banking organizations.
• Unlike the current rules, which require Category I and II banking organizations to calculate risk-based capital requirements under two frameworks and to comply with the more stringent of the requirements, the proposed approach would require banking organizations to comply with only one risk-based capital framework. Under the proposal, a Category I or II banking organization would calculate its risk-based capital ratios under the new expanded risk-based approach, and the advanced approaches would be removed from the regulatory capital framework.
• The proposal also would remove the required deduction from regulatory capital for concentrations of mortgage servicing assets (MSA). Rather than deducting amounts of MSAs that exceed a specified concentration threshold, all MSAs would be subject to a risk weight of 250 percent.
• The proposal would improve risk sensitivity by varying capital requirements according to several credit risk factors, such as loan-to-value ratios for residential mortgages and other real estate exposures, repayment history for retail exposures, and assessed creditworthiness for corporate exposures.
• The proposal includes a standardized operational risk capital requirement based on a banking organization’s business volume.
• Finally, the proposal would revise the models-based approach to market risk and introduce a standardized approach to serve as a credible fallback approach. The proposal would also include a risk-sensitive framework for capturing credit valuation adjustment (CVA) risk for derivative exposures.
• The revised market risk rule would apply to all Category I and II bank holding companies and to national banks, federal savings associations, and other banking organizations with $5 billion or more in trading assets plus trading liabilities or for which trading assets plus trading liabilities exceeds 10 percent of total assets.

Further Information

Please contact Venus Fan, Risk Expert, or Benjamin Pegg, Technical Expert, Capital Policy, at (202) 649-6370; or Carl Kaminski, Assistant Director, or Kevin Korzeniewski, Counsel, Chief Counsel’s Office, at (202) 649-5490.

Adam J. Cohen
Senior Deputy Comptroller and Chief Counsel

Related Link

• Regulatory Capital Rule: Category I and II Banking Organizations, Banking Organizations With Significant Trading Activity, and Optional Adoption for Other Banking Organizations (PDF)