[Code of Federal Regulations]
[Title 12 Volume 1]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR3.4]

[Page 14-15]
 
                       TITLE 12--BANKS AND BANKING
 
   CHAPTER I--COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY
 
PART 3--MINIMUM CAPITAL RATIOS; ISSUANCE OF DIRECTIVES--Table of Contents
 
                  Subpart A--Authority and Definitions
 
Sec. 3.4  Reservation of authority.

    (a) Deductions from capital. Notwithstanding the definitions of Tier 
1 capital and Tier 2 capital in Sec. 3.2 (c) and (d), the OCC may find 
that a newly developed or modified capital instrument constitutes Tier 1 
capital or Tier 2 capital, and may permit one or more banks to include 
all or a portion of funds obtained through such capital instruments as 
Tier 1 or Tier 2 capital, permanently or on a temporary basis, for the 
purposes of compliance with this part or for other purposes. Similarly, 
the OCC may find that a particular intangible asset, deferred tax asset 
or credit-enhancing interest-only strip need not be deducted from Tier 1 
or Tier 2 capital. Conversely, the OCC may find that a particular 
intangible asset, deferred tax asset, credit-enhancing interest-only 
strip or other Tier 1 or Tier 2 capital component has characteristics or 
terms that diminish its contribution to a bank's ability to absorb 
losses, and may require the deduction from Tier 1 or Tier 2 capital of 
all of the component or of a greater portion of the component than is 
otherwise required.
    (b) Risk weight categories. Notwithstanding the risk categories in 
sections 3 and 4 of appendix A to this part, the OCC will look to the 
substance of the transaction and may find that the assigned risk weight 
for any asset or the credit equivalent amount or credit conversion 
factor for any off-balance sheet item does not appropriately reflect the 
risks imposed on a bank and may require another risk weight, credit 
equivalent amount, or credit conversion factor that the OCC deems 
appropriate. Similarly, if no risk weight, credit equivalent amount, or 
credit conversion factor is specifically assigned, the

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OCC may assign any risk weight, credit equivalent amount, or credit 
conversion factor that the OCC deems appropriate. In making its 
determination, the OCC considers risks associated with the asset or off-
balance sheet item as well as other relevant factors.

[55 FR 38800, Sept. 21, 1990, as amended at 66 FR 59630, Nov. 29, 2001]