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Capital and Prudential Standards Blog

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Federal Reserve Proposes to Amend Capital Plan and Stress Test Rules

On Friday, July 17, 2015, the Federal Reserve released a proposal (the “Proposal”) to amend the capital plan and stress test rules for large bank holding companies and certain banking organizations with total consolidated assets of more than $10 billion.  The proposed changes would take effect beginning with the 2016 capital planning and stress testing cycles, the submissions for which are due April 5, 2016 based on a planning horizon beginning with actual capital levels as of December 31, 2015. …  Read More

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Visuals of Federal Reserve’s 2015 CCAR and Dodd-Frank Stress Test Results

We have prepared visuals of the 2015 Comprehensive Capital Analysis and Review (“CCAR“) and Dodd-Frank Act Stress Test (“DFAST“) results.   At this time, the visuals include the company-run DFAST results for 24 out of the 31 companies participating in this year’s CCAR program.

View Davis Polk’s Visuals of 2015 CCAR and DFAST Results

Background on DFAST:  Pursuant to its DFAST regulations, the Federal Reserve conducts annual supervisory stress tests to assess the potential impact of various hypothetical economic scenarios on the consolidated earnings, losses and regulatory capital of each U.S.…  Read More

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Overview of Basel Committee’s Revised Pillar 3 Disclosures

The Basel Committee has finalized its standard revising the Pillar 3 capital disclosures applicable to internationally active banks. Pillar 3 of the Basel framework aims to promote market discipline through qualitative and quantitative regulatory disclosure requirements, whereas Pillar 1 encompasses the framework of risk-based capital ratios and other quantitative requirements. Pillar 3 was first introduced in 2004 as part of Basel II and revised in 2009 as part of Basel 2.5. The newly finalized revisions will take effect concurrent with banks’ year-end 2016 financial reporting, superseding the earlier Pillar 3 standards (although other disclosure standards, such as the Basel III leverage ratio disclosure requirements published in January 2014, remain in force).…  Read More

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Overview of Basel Committee’s Revised Pillar 3 Disclosures

The Basel Committee has finalized its standard revising the Pillar 3 capital disclosures applicable to internationally active banks.  Pillar 3 of the Basel framework aims to promote market discipline through qualitative and quantitative regulatory disclosure requirements, whereas Pillar 1 encompasses the framework of risk-based capital ratios and other quantitative requirements.  Pillar 3 was first introduced in 2004 as part of Basel II and revised in 2009 as part of Basel 2.5.  The newly finalized revisions will take effect concurrent with banks’ year-end 2016 financial reporting, superseding the earlier Pillar 3 standards (although other disclosure standards, such as the Basel III leverage ratio disclosure requirements published in January 2014, remain in force). …  Read More

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Basel Committee’s 2015-2016 Work Program

On Friday, January 23, 2015, the Basel Committee published its regulatory work program for 2015 and 2016, summarizing the policy initiatives the Committee is expected to undertake as it continues to propose and finalize the remaining elements of its Basel III regulatory reform agenda.  The Committee’s work program is organized around the following four themes:

  • Developing and finalizing specific policy measures from the Committee’s post-crisis reform agenda;
  • Assessing the Basel III framework’s overall balance between simplicity, comparability and risk sensitivity;
  • Monitoring national regulators’ implementation of the Basel III framework; and
  • Improving the effectiveness of banking supervision.
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Risk Governance: Visual Memorandum on Final Guidelines Issued by the OCC

The OCC has issued final risk governance guidelines that formalize its heightened expectations for large national banks and federal savings associations. The risk governance guidelines set new, and much higher, minimum standards for the design and implementation of a bank’s own risk governance framework and the oversight of such framework by the bank’s board of directors. The guidelines are enforceable under the OCC’s statutory authority to prescribe operational and managerial standards for national banks and federal savings associations.

State banks that are not subject to the OCC’s risk governance guidelines should still pay attention because the same or similar principles will likely be applied by the Federal Reserve and the FDIC to large state member and non-member banks.…  Read More

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