Bank of America 2013 Annual Report Download - page 240

238 Bank of America 2013
The table below presents actual and minimum required regulatory capital amounts at December 31, 2013 and 2012.
Regulatory Capital
December 31
2013 2012
Actual Actual
(Dollars in millions) Ratio Amount
Minimum
Required (1) Ratio Amount
Minimum
Required (1)
Risk-based capital
Tier 1 common capital
Bank of America Corporation 11.19% $ 145,235 n/a 11.06% $ 133,403 n/a
Tier 1 capital
Bank of America Corporation 12.44 161,456 $ 77,852 12.89 155,461 $ 72,359
Bank of America, N.A. 12.34 125,886 61,208 12.44 118,431 57,099
FIA Card Services, N.A. 16.83 20,135 7,177 17.34 22,061 7,632
Total capital
Bank of America Corporation 15.44 200,281 129,753 16.31 196,680 120,598
Bank of America, N.A. 13.84 141,232 102,013 14.76 140,434 95,165
FIA Card Services, N.A. 18.12 21,672 11,962 18.64 23,707 12,719
Tier 1 leverage
Bank of America Corporation 7.86 161,456 82,125 7.37 155,461 84,429
Bank of America, N.A. 9.21 125,886 68,379 8.59 118,431 68,957
FIA Card Services, N.A. 12.91 20,135 7,801 13.67 22,061 8,067
(1) Dollar amount required to meet guidelines to be considered well-capitalized.
n/a = not applicable
The Federal Reserve requires BHCs to submit a capital plan
and requests for capital actions on an annual basis, consistent
with the rules governing the Comprehensive Capital Analysis and
Review (CCAR). The CCAR is the central element of the Federal
Reserve’s approach to ensure that large BHCs have adequate
capital and robust processes for managing their capital. In January
2013, the Corporation submitted its 2013 capital plan and the
Federal Reserve did not object to the Corporation’s 2013 capital
plan. In January 2014, the Corporation submitted its 2014 CCAR
plan and related supervisory stress tests to the Federal Reserve.
The Federal Reserve announced that it will release summary
results, including supervisory projections of capital ratios, losses
and revenues under stress scenarios, and publish the results of
stress tests conducted under the supervisory adverse scenario in
March 2014.
Regulatory Capital Developments
Market Risk Final Rule
Effective January 1, 2013, Basel 1 was amended by the Market
Risk Final Rule, and is referred to herein as the Basel 1 – 2013
Rules. At December 31, 2013, the Corporation measured and
reported its capital ratios and related information in accordance
with the Basel 1 – 2013 Rules, which introduced new measures
of market risk including a charge related to stressed Value-at-Risk
(VaR), an incremental risk charge and the comprehensive risk
measure (CRM), as well as other technical modifications, all of
which were effective January 1, 2013. The CRM is used to
determine the risk-weighted assets for correlation trading
positions. With approval from U.S. banking regulators, but not
sooner than one year following compliance with the Market Risk
Final Rule, the Corporation may remove a surcharge applicable to
the CRM.
In December 2013, U.S. banking regulators issued an
amendment to the Market Risk Final Rule, effective on April 1,
2014, to reflect certain aspects of the final Basel 3 Regulatory
Capital rules (Basel 3). Revisions were made to the treatment of
sovereign exposures and certain traded securitization positions
as well as clarification as to the timing of required disclosures.
Basel 3 Regulatory Capital Rules
The final Basel 3 regulatory capital rules (Basel 3) became
effective on January 1, 2014. Various aspects of Basel 3 will be
subject to multi-year transition periods ending December 31, 2018
and Basel 3 generally continues to be subject to interpretation by
the U.S. banking regulators. Basel 3 will materially change the
Corporation’s Tier 1 common, Tier 1 and Total capital calculations.
Basel 3 introduces new minimum capital ratios and buffer
requirements and a supplementary leverage ratio; changes the
composition of regulatory capital; revises the adequately
capitalized minimum requirements under the Prompt Corrective
Action framework; expands and modifies the calculation of risk-
weighted assets for credit and market risk (the Advanced
approach); and introduces a Standardized approach for the
calculation of risk-weighted assets. This will replace the Basel 1
– 2013 Rules effective January 1, 2015.
Under Basel 3, the Corporation is required to calculate
regulatory capital ratios and risk-weighted assets under both the
Standardized approach and, upon notification of approval by U.S.
banking regulators anytime on or after January 1, 2014, the
Advanced approach. For 2014, the Standardized approach uses
risk-weighted assets as measured under the Basel 1 – 2013 Rules
and Basel 3 capital in the determination of the Basel 3
Standardized approach capital ratios. The approach that yields the
lower ratio is to be used to assess capital adequacy including
under the Prompt Corrective Action framework. Prior to receipt of
notification of approval, the Corporation is required to assess its
capital adequacy under the Standardized approach only. The
Prompt Corrective Action framework establishes categories of
capitalization, including “well capitalized,” based on regulatory
ratio requirements. U.S. banking regulators are required to take
certain mandatory actions depending on the category of