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Volcker Metrics Timing: OCC Provides Guidance in Dear CEO Letter

For those anxiously awaiting the oft-promised FAQ on metrics from the interagency task force on Volcker, the OCC has provided the answer.  In a Dear CEO letter dated yesterday, the OCC makes it clear in the following guidance that Volcker Rule metrics recording, as many of us have been saying for some time, begins on July 1st.  The relevant text of the Dear CEO letter is below.  Who knew that Dear CEO letters are the new FAQs?

“Banks with trading assets and liabilities of at least $50 billion will be required to report metrics designed to monitor their permitted trading activities.

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Davis Polk Blackline of Federal Reserve’s Corrections to Dodd-Frank Stress Test Capital Ratio Projections

Today, the Federal Reserve published corrections to its 2014 supervisory Dodd-Frank Act stress test (“DFAST“) results.  We have prepared a blackline (available here) showing the Federal  Reserve’s revised capital ratio projections for 30 large U.S. bank holding companies under the supervisory severely adverse stress scenario.  According to the Federal Reserve, it adjusted the supervisory DFAST results to “address inconsistencies in the treatment of the fourth quarter 2013 actual capital actions and assumptions about preferred and employee compensation-related issuance over the course of the planning horizon.”

View Blackline of Federal Reserve’s Corrections to 2014 Supervisory DFAST Capital Ratio Projections

 

Materials: 

Federal Reserve, Dodd-Frank Act Stress Test 2014: Supervisory Stress Test Methodology and Results (originally published on Mar.…  Read More

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Davis Polk Blackline of Dodd-Frank Stress Test Guidance for Mid-sized Banking Organizations

We have prepared a blackline that compares (1) the U.S. banking agencies’ final supervisory guidance regarding annual Dodd-Frank company-run stress tests for banking organizations with $10 billion to $50 billion in total consolidated assets (mid-sized banking organizations) against (2) the July 2013 proposed supervisory guidance.

View Blackline Comparing Final and Proposed Supervisory Guidance on Dodd-Frank Company-Run Stress Tests for Mid-sized Banking Organizations (PDF) Read More

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Risk Governance: Visual Memorandum on Guidelines Proposed by the OCC

The OCC has proposed a set of enforceable and specific risk governance guidelines to formalize its heightened expectations for large national banks and federal savings associations. The risk governance guidelines would 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.

State banks that are not subject to the OCC’s proposed 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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Federal Reserve Issues Guidance to Large Financial Institutions on Managing Foreign Exchange Settlement Risks for Physically Settled Transactions

Today, the Federal Reserve issued a Supervision and Regulation letter (SR letter) regarding the Basel Committee’s February 2013 guidance for managing risks associated with the settlement of foreign exchange transactions.  The Basel Committee’s guidance sets forth seven guidelines for managing foreign exchange transaction settlement risks.  Our earlier blog post on the Basel Committee’s guidance is available here.  The Federal Reserve stated that large financial institutions subject to the SR letter should apply the Basel Committee’s seven guidelines to their foreign exchange activities. …  Read More

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Basel Committee’s Final Guidance for Managing Risks Associated with the Settlement of Foreign Exchange Transactions

Today, the Basel Committee issued guidance for managing risks associated with the settlement of foreign exchange transactions.  The guidance updates the Basel Committee’s existing supervisory guidance, which was published in 2000.

According to the Basel Committee, while its original 2000 guidance focused mainly on the principal risk element of FX settlement-related risks, the new guidance is intended to address a broader range of FX settlement-related risks.  The new guidance provides more comprehensive and detailed direction on governance arrangements and the management of principal risk as well as all other FX settlement-related risks.  …  Read More

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