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OCC Bulletin 2023-29 | August 29, 2023

Long-Term Debt Requirements for Large Bank Holding Companies, Certain Intermediate Holding Companies of Foreign Banking Organizations, and Large Insured Depository Institutions: Notice of Proposed Rulemaking


Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties


On August 29, 2023, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (the board), and the Federal Deposit Insurance Corporation (collectively, the agencies) issued a joint notice of proposed rulemaking that would require certain large depository institution holding companies, U.S. intermediate holding companies of foreign banking organizations (collectively, large banking organizations [LBO]), and certain insured depository institutions (IDI) to issue and maintain an outstanding minimum amount of long-term debt (LTD). The LTD requirement would improve the resolvability of these LBOs and IDIs in case of failure, reduce costs to the Deposit Insurance Fund, and mitigate contagion and financial stability risks by reducing the risk of loss to uninsured depositors.

The agencies encourage stakeholders to review the proposed rule and provide comments before the close of the comment period on November 30, 2023.

Note for Community Banks

The proposed rule would not apply to community banks.


The agencies are proposing a rule to improve the resolvability of LBOs and certain large IDIs (collectively, banks) by requiring a minimum amount of LTD that can absorb losses in the event of failure.

  • U.S. global systemically important bank (GSIB) holding companies and intermediate holding companies of foreign GSIBs are currently subject to LTD requirements under the board’s total loss absorbing capacity rule.1 The proposed rule would expand minimum LTD requirements to other LBOs and to certain IDIs of LBOs.
  • The proposed rule would require that the top-tier LBO issue the LTD externally.
  • An IDI that is a subsidiary of an LBO and that either (1) has at least $100 billion in total assets or (2) is affiliated with an IDI with at least $100 billion in total assets would generally be required to issue LTD internally to a consolidating parent LBO to ensure sufficient loss absorbing resources at the IDI.
  • In the case of an IDI with at least $100 billion in total assets without a holding company subject to the proposal, the IDI would be allowed to issue the LTD either internally or externally.
  • The LTD requirement would equal the largest of the following amounts:2
    • 6 percent of risk-weighted assets;
    • 2.5 percent of total leverage exposure (as defined under the supplementary leverage ratio rule) for banks subject to the supplementary leverage ratio; and
    • 3.5 percent of average total consolidated assets (the denominator of the tier 1 leverage ratio).
  • The proposal includes a three-year phased-in transition period. Banks would be required to meet 25 percent of the requirement at the end of year one, 50 percent of the requirement at the end of year two, and 100 percent of the requirement at the end of year three. Banks that cross the $100 billion threshold in the future would be subject to the same three-year phased transition.
  • The requirements for eligible LTD instruments would be similar to those in the board’s total loss absorbing capacity rule.
    • As a general matter, LTD securities would need to be unsecured, “plain vanilla” (the rule would exclude complex instruments such as structured notes and other instruments with derivative-linked features), governed by U.S. law, contractually subordinated, and have an outstanding maturity greater than one year. The outstanding principal amount of securities with a maturity of less than two years but greater than one year, eligible to count toward the new requirement would be subject to a 50 percent haircut. Securities with a maturity greater than two years would not be subject to a haircut.
    • Certain outstanding debt instruments would be “grandfathered” even if they do not meet all the eligibility requirements.
  • The proposal would also require certain banks to deduct investments in other banks’ LTD that exceed certain amounts.

In providing loss-absorbing capacity, LTD can give policymakers greater flexibility in responding to bank failures. In the resolution of an IDI, sufficient LTD issued and maintained by an IDI that consequently fails may increase the likelihood of an orderly resolution for the IDI. In addition, the proposed LTD requirement could improve the resilience of banks by enhancing the stability of their funding profile and strengthening market discipline.

Further Information

Please contact Joanne Phillips, Counsel, Chief Counsel’s Office, at (202) 649-5490, or Andrew Tschirhart, Risk Expert, Capital and Regulatory Policy, at (202) 649-6370.


Benjamin McDonough
Senior Deputy Comptroller and Chief Counsel

Related Links

1 Refer to 82 Fed. Reg. 8266.

2 The LTD requirement for U.S. GSIBs’ LBOs and intermediate holding companies of foreign GSIBs established by the board’s total loss absorbing capacity rule would remain unchanged.