Risk-Based Capital Standards; Concentration of Credit Risk and Risks of Nontraditional Activities

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The OCC, the Board, the FDIC and the OTS (collectively ``the agencies'') are issuing this proposed rule to implement the portions of section 305 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) that require the agencies to revise their risk- based capital standards for insured depository institutions to ensure that those standards take adequate account of concentration of credit risk and the risks of nontraditional activities. The intended effect of this proposed rule is to ensure that the agencies take adequate account of concentration of credit risk and the risks of nontraditional activities in assessing an institution's capital adequacy. The proposed rule amends the risk-based capital standards by explicitly identifying concentration of credit risk and certain risks arising from nontraditional activities, as well as an institution's ability to manage these risks, as important factors in assessing an institution's overall capital adequacy.