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Capital and Prudential Standards Blog

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Home Archive for category "Enhanced Prudential Standards" (Page 4)
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Financial Stability Board’s Proposed Framework for Minimum Haircuts on Securities Financing Transactions

Today, the Financial Stability Board (FSB) published a set of policy recommendations and reports designed to strengthen the oversight and regulation of the shadow banking system.  One of the FSB’s reports, entitled Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos, sets out recommendations for addressing financial stability risks in this area, including enhanced transparency, regulation of securities financing and improvements to market structure.

FSB’s Proposed Framework for Minimum Haircuts on Securities Financing Transactions:  Among other things, the FSB report includes a proposed regulatory framework for haircuts on non-centrally cleared securities financing transactions (SFTs). …  Read More

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Federal Reserve Publishes Paper on Capital Planning at Large Bank Holding Companies

Today, the Federal Reserve published a paper entitled Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice.  The paper is intended to promote better capital planning at large bank holding companies (BHCs) and to provide greater clarity on the standards against which those practices are evaluated as part of the Federal Reserve’s annual Comprehensive Capital Analysis and Review (CCAR).

The paper discusses the Federal Reserve’s expectations for capital planning at large BHCs and described the range of practices it has observed at these companies during the past three CCAR exercises. …  Read More

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U.S. Banking Regulators Propose Dodd-Frank Company-Run Stress Test Guidance for Mid-Sized Banking Organizations

Beginning this fall, many U.S. banking organizations will be conducting their first annual Dodd-Frank company-run stress tests.  Today, the U.S. banking regulators (Federal Reserve, OCC and FDIC) proposed guidance setting forth supervisory expectations for stress tests conducted by national banks, state member and non-member banks, savings associations, bank holding companies and savings and loan holding companies with total consolidated assets of greater than $10 billion and less than $50 billion (collectively, “mid-sized firms”).

The proposed guidance is intended to help mid-sized firms conduct stress tests that are appropriately scaled to their size, complexity, risk profile, business mix and market footprint. …  Read More

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Financial Stability Board Identifies Global Systemically Important Insurers (G-SIIs) and Policy Measures that Will Apply to G-SIIs

Today, the Financial Stability Board (FSB), in consultation with the International Association of Insurance Supervisors (IAIS) and national authorities, identified an initial list of nine global systemically important insurers (G-SIIs).  These G-SIIs were identified using the IAIS assessment methodology.  Going forward, the list of G-SIIs will be updated each year in November, starting in 2014.

Policy Measures Applicable to G-SIIs:  Today, the IAIS also published a set of policy measures that will apply to G-SIIs and are consistent with the policy framework published by the FSB in November 2011.  …  Read More

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Basel Committee Updates Assessment Methodology for Global Systemically Important Banks (G-SIBs) and Introduces Disclosure Requirements

Today, the Basel Committee made certain revisions to its assessment methodology for identifying and assigning capital surcharges to global systemically important banks (G-SIBs).  The Basel Committee also introduced public disclosure requirements for large banks with respect to the 12 indicators used in the assessment methodology.  The original assessment methodology for G-SIBs was published by the Basel Committee in November 2011.

Background on Basel Committee’s G-SIB Framework:  The assessment methodology for G-SIBs is based on an indicator-based approach and comprises five broad categories: size; interconnectedness; lack of readily available substitutes or financial institution infrastructure; global (cross-jurisdictional) activity; and complexity.…  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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