The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (with the agencies) have jointly published the agreement on the standardization and application of securities by custodian institutions. These guidelines replace the 2004-25 OCC, Uniform Agreement on the Classification of Securities (2004), replacing the agencies` revised investment quality standards for credit quality instead of credit ratings as a basis for securities classification. Confidentiality provisions in third-party contracts. (SR 07-19) (15 KB) Investment rank securities are no longer defined as one of the four highest credit ratings, but are considered sufficiently capable of repaying the commitment in the purchasing institution`s credit analyses. An issuer has sufficient capacity to meet its financial obligations when the risk of default is low and full and timely repayment of capital and interest is expected. The explanatory language of the agreement provides additional details on the level of investment standards reported in the 2012-18 OCC Bulletin. In practical terms, the agreement stipulates that the classification should be based on the value of the instrument as a product, provided it is maintained until its maturity. Therefore, the concept of “debt liquidation” in the classification definition is equivalent to the term “payment of commitment in its entirety” in the definition of the investment class. Therefore, if the institution`s analyses do not support the full payment of all future contractual amounts, this guarantee is not a level of investment- Similarly, securities with realized credit losses do not meet the standard of investment degree. As this agreement focuses on the application of investment degree classification standards, the 2004 agreement guidelines for the processing and classification of fair value declines, based on credit ratings, are removed. The agreement does not address the definition of appropriate accounting, for example. B, classification, valuation and other temporary depreciation of securities. Securities accounting is covered within the generally accepted accounting standards in the United States in ASC 320, “Investments – Debt and Equity Securities,” ASC 325, “Investments – Other” and in the instructions and gloss of the Call Report.
For any questions regarding securities accounting, please contact the CCO`s Senior Accountant office at (202) 649-6280. Guidelines for inter-institutional evaluation and evaluation. (58 KB) This agreement does not change the long-standing definitions of asset classification agencies. As in the case of the previous version, auditors may assess and classify credit risk of a property value, regardless of the ratings assigned by the institution or external rating entity, at their own discretion, if the available information on credit risk warrants it.