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Home Archive for category "CCAR" (Page 2)
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Basel Committee Discusses Fundamental Elements of a Bank’s Capital Planning Process

Today, the Basel Committee published a paper that discusses four fundamental components of a sound capital planning process:  (1) internal control and governance; (2) capital policy and sufficient risk capture; (3) forward-looking view through stress testing; and (4) management framework for preserving capital.

The Basel Committee stated that its paper does not set forth new capital planning guidance.  Rather, it presents sound practices observed at some banks, which the Basel Committee believes can foster overall improvement in banks’ capital planning processes. …  Read More

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Federal Reserve Advises Large Banking Organizations to Carefully Evaluate Certain Risk-Transfer Transactions

Today, the Federal Reserve issued a Supervision and Regulation letter (SR letter) entitled Risk Transfer Considerations When Assessing Capital Adequacy – Supplemental Guidance on Consolidated Supervision Framework for Large Financial Institutions.

The SR letter applies to U.S. bank holding companies and savings and loan holding companies with consolidated assets of $50 billion or more as well as foreign banking organizations with combined assets of U.S. operations of $50 billion or more (collectively, “large banking organizations”).

The purpose of the SR letter is to provide guidance on how certain risk transfer transactions affect assessments of capital adequacy at large banking organizations. …  Read More

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Davis Polk Blackline Comparing 2014 CCAR Instructions with 2013 Instructions

Yesterday, the Federal Reserve issued instructions for the 2014 Comprehensive Capital Analysis and Review (CCAR).  Thirty bank holding companies with $50 billion or more of total consolidated assets will participate in the 2014 CCAR, including 18 bank holding companies that participated in the 2013 CCAR and 12 bank holding companies that will participate in CCAR for the first time.

We have created a blackline that compares the Federal Reserve’s 2014 CCAR instruction with its 2013 instructions.

View Blackline Comparing 2014 CCAR Instructions with 2013 Instructions (PDF) Read More

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Davis Polk Visuals of the Federal Reserve’s 2014 Stress Test Scenarios

Yesterday, the Federal Reserve issued three hypothetical, supervisory scenarios that will be used in the 2014 capital planning and stress testing cycle.  The OCC issued substantively identical scenarios.

The baseline, adverse, and severely adverse scenarios each include 28 variables (16 domestic variables and 12 international variables), including economic activity, unemployment, exchange rates, prices, incomes and interest rates. The 28 variables include all of the variables provided last year and two new domestic variables—the yield on the 5-year Treasury bond and the prime rate.…  Read More

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Federal Reserve Issues 2014 CCAR Instructions and Supervisory Scenarios

Today, the Federal Reserve published instructions for the 2014 Comprehensive Capital Analysis and Review (CCAR).  Thirty bank holding companies with $50 billion or more of total consolidated assets will participate in the 2014 CCAR, including 18 bank holding companies that participated in the 2013 CCAR and 12 bank holding companies that will participate in CCAR for the first time.  The 2014 CCAR submissions are due by January 6, 2014.

The Federal Reserve also issued three hypothetical, supervisory scenarios that will be used in the 2014 capital planning and stress testing cycle.  …  Read More

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Federal Reserve Publishes Summary Instructions for 2013 Dodd-Frank Company-Run Mid-Cycle Stress Tests

Today, the Federal Reserve published instructions to the 18 large U.S. bank holding companies (BHCs) that are required to submit the results of their Dodd-Frank company-run, mid-cycle stress tests to the Federal Reserve on July 5, 2013.

The Dodd-Frank Act and the Federal Reserve’s implementing regulations require large BHCs and non-bank financial companies that are designated as systemically important by the Financial Stability Oversight Council (FSOC) to conduct two company-run stress tests each year.

Internally-developed Stress Scenarios:  For the mid-cycle stress test, which is being conducted for the first time in 2013 by 18 BHCs, each BHC develops its own baseline, adverse and severely adverse scenarios to best reflect its individual operations and risks.  …  Read More

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