FAS 158 won't affect the regulatory capital of banking organizations, according to an interim determination announced in a news release today by the Federal Reserve Board of Governors. The accounting rule, which takes effect Friday, requires unfunded liabilities of defined benefit and other postretirement plans - as well as overfunded assets of plans - to be moved to the corporate balance sheet from financial statement notes.
"After a banking organization initially applies FAS 158, changes in the benefit plan asset or liability reported on the organization's balance sheet will be recognized in the year in which the changes occur and will result in an increase or decrease in accumulated other comprehensive income," a component of equity capital, the statement said.
"Until the Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision determine otherwise through rule making, banks, bank holding companies and savings associations should exclude from regulatory capital any amounts recorded in accumulated other comprehensive income," a component of equity capital, "resulting from the adoption and application of FAS 158," the statement said.
