Today, the Federal Reserve issued a proposal to revise certain aspects of its capital planning and stress testing regulations. We have prepared a blackline (available here) showing these proposed changes.
Key changes: The proposal would, among other things:
- Shift the start date of the capital plan and stress test cycles from October 1 of a calendar year to January 1 of the following calendar year. A large (≥$50 billion) bank holding company (“BHC“) would be required to submit its capital plan and stress test results to the Federal Reserve by April 5, three months later than under current regulations. A mid-size (>$10 billion but <$50 billion) BHC would be required to submit its stress test results to the Federal Reserve by July 31. Savings and loan holding companies and state member banks that are subject to the Dodd-Frank Act stress tests also would be required to submit their results several months later than under the current regulations.
- The proposal would make the new schedule effective beginning with the 2015-2016 capital plan and stress test cycles. For the upcoming 2014-2015 capital plan cycle, the schedule would be unchanged from prior years.
- Modify the capital plan rule to limit a large BHC’s ability to make capital distributions to the extent that its actual capital issuances were less than the amount indicated in its capital plan.
- Clarify the application of the capital plan rule to a large BHC that is a subsidiary of a U.S. intermediate holding company of a foreign banking organization.
- Make other technical, clarifying changes, such as adding a definition of “BHC stress scenario” to the capital plan rule; permitting, rather than requiring, resubmission of a capital plan following the Federal Reserve’s objection; and eliminating prior approval requirements for certain capital actions.
Comments on the proposal are due on August 11, 2014.
Federal Reserve, Amendments to the Capital Plan and Stress Test Rules (June 12, 2014) available here: http://federalreserve.gov/newsevents/press/bcreg/bcreg20140612a1.pdf.