Section 3.100 - Purpose, applicability, and principle of conservatism(a)Purpose. This subpart E establishes: (1) Minimum qualifying criteria for national banks or Federal savings associations using institution-specific internal risk measurement and management processes for calculating risk-based capital requirements; and(2) Methodologies for such national banks or Federal savings associations to calculate their total risk-weighted assets.(b)Applicability.(1) This subpart applies to a national bank or Federal savings association that: (i) Is a subsidiary of a global systemically important BHC, as identified pursuant to 12 CFR 217.402 ;(ii) Is a Category II national bank or Federal savings association;(iii) Is a subsidiary of a depository institution that uses the advanced approaches pursuant to this subpart (OCC), 12 CFR part 217, subpart E (Board), or 12 CFR part 324 (FDIC), to calculate its risk-based capital requirements;(iv) Is a subsidiary of a bank holding company or savings and loan holding company that uses the advanced approaches pursuant to subpart E of 12 CFR part 217 to calculate its risk-based capital requirements; or(v) Elects to use this subpart to calculate its risk-based capital requirements.(2) A market risk national bank or Federal savings association must exclude from its calculation of risk-weighted assets under this subpart the risk-weighted asset amounts of all covered positions, as defined in subpart F of this part (except foreign exchange positions that are not trading positions, over-the-counter derivative positions, cleared transactions, and unsettled transactions).(c)Principle of conservatism. Notwithstanding the requirements of this subpart, a national bank or Federal savings association may choose not to apply a provision of this subpart to one or more exposures provided that: (1) The national bank or Federal savings association can demonstrate on an ongoing basis to the satisfaction of the OCC that not applying the provision would, in all circumstances, unambiguously generate a risk-based capital requirement for each such exposure greater than that which would otherwise be required under this subpart;(2) The national bank or Federal savings association appropriately manages the risk of each such exposure;(3) The national bank or Federal savings association notifies the OCC in writing prior to applying this principle to each such exposure; and(4) The exposures to which the national bank or Federal savings association applies this principle are not, in the aggregate, material to the national bank or Federal savings association.78 FR 62157, 62273, 10/11/2013, as amended at 80 FR 41415, 7/15/2015; 84 FR 59265, 12/31/2019