June 12, 2014
Federal Reserve Board invites comment on proposal to modify regulations for capital planning and stress testing
For immediate release
The Federal Reserve Board on Thursday invited comment on a proposal to modify the regulations for capital planning and stress testing.
The proposed rule would 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. Under the proposed rule, a bank holding company with total consolidated assets of $50 billion or more would be required to submit its capital plan and stress test results to the Federal Reserve by April 5, three months later than under the current rulemakings.
A bank holding company with total consolidated assets of more than $10 billion and less than $50 billion 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 who are subject to the stress tests under the Dodd-Frank Wall Street Reform and Consumer Protection Act also would be required to submit their results several months later than under the current rules. Although the dates would be shifted forward, the Federal Reserve would apply the same capital planning and stress testing processes during a 15-month transition period until the new schedule takes effect.
The proposed rule 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. A large bank holding company would submit a capital plan on January 5, 2015, and the Federal Reserve would issue an objection or non-objection to a capital plan by March 31, 2015.
The proposed rule includes a number of further measures to alter the capital planning and stress test processes. It would:
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; and
- 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 proposed rule will be accepted until August 11, 2014.
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