General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
April 25, 2018

FED seeks comment on proposal to simplify its capital rules for large banks, while preserving strong capital levels that would maintain the ability to lend under stressful conditions. The proposal is to introduce a stress capital buffer (SCB), which would in part integrate the forward-looking stress test results with the non-stress capital requirements of FED. The proposed rule amends regulatory capital, capital plan, and stress test rules. This proposal also involves changes to the reporting forms and instructions for FR Y-9C and FR Y-14A. Comments on the proposal must be received by June 25, 2018.

SCB would be sized through the stress test and would be part of a firm's ongoing capital requirements, producing a tailored and risk-sensitive capital regime for large banking organizations. With the proposed changes, large firms would be required to meet 14 capital-related requirements, instead of the current 24. For example, if a firm has a common equity tier 1 capital ratio of 9% and it declines to 6% under the hypothetical severely adverse scenario of the stress test, its SCB for the coming year would be 3%. The SCB would then be added to the minimum 4.5% common equity capital requirement, which remains unchanged. This would result in a 7.5% common equity capital requirement for the coming year. If the firm is a global systemically important bank (G-SIB), its G-SIB surcharge—an additional cushion of capital that is held by the largest banks—would be added to the SCB. Additionally, four quarters of planned dividends would be added to the SCB.

FED estimates that, relative to the current requirements, the proposed changes would generally maintain or somewhat increase the amount of capital required for G-SIBs and generally decrease modestly the amount of capital required for most non-G-SIBs. However, the SCB of a firm will vary in size throughout the economic cycle, depending on the risk exposures of the firm and the severity of the hypothetical stress test scenarios. No firm is expected to need to raise additional capital as a result of this proposal. The FED proposal would also modify several assumptions in the CCAR process to better align them with a firm's expected actions under stress. Currently, bank holding companies with more than USD 50 billion in total consolidated assets undergo annual supervisory stress tests run by FED, known as the Comprehensive Capital Analysis and Review (CCAR). CCAR requires firms to demonstrate their ability to continue to lend under hypothetical adverse economic conditions. These firms are also subject to non-stress capital requirements.


Related Links

Comment Due Date: June 25, 2018

Keywords: Americas, US, Banking, Stress Capital Buffer, Regulatory Capital, CCAR, Stress Testing, Large Banks, Reporting, FED

Related Insights

BCBS Finds Liquidity Risk Management Principles Remain Fit for Purpose

BCBS completed a review of its 2008 Principles for sound liquidity risk management and supervision. The review confirmed that the principles remain fit for purpose.

January 17, 2019 WebPage Regulatory News

HKMA Urges Local Banks to Start Working on FRTB Implementation

HKMA announced that it plans to issue a consultation paper on the new market risk standard in the second quarter of 2019.

January 17, 2019 WebPage Regulatory News

EBA Finalizes Guidelines for High-Risk Exposures Under CRR

EBA published the final guidelines on the specification of types of exposures to be associated with high risk under the Capital Requirements Regulation (CRR). The guidelines are intended to facilitate a higher degree of comparability in terms of the current practices in identifying high-risk exposures.

January 17, 2019 WebPage Regulatory News

MAS Guidelines on Risk Mitigation Requirements for OTC Derivatives

MAS published guidelines on risk mitigation requirements for non-centrally cleared over-the-counter (OTC) derivatives contracts.

January 17, 2019 WebPage Regulatory News

BoE Publishes the Schedule for Statistical Reporting for 2019

BoE published the updated schedule for statistical reporting for 2019. The reporting institutions use the online statistical data application (OSCA) to submit statistical data to BoE.

January 16, 2019 WebPage Regulatory News

PRA Delays Final Direction on Reporting of Private Securitizations

PRA and FCA have delayed the issuance of final direction, including the final template, on reporting of private securitizations, from January 15, 2019 to the end of January 2019.

January 15, 2019 WebPage Regulatory News

SNB Updates Forms on Supervisory Reporting for Banks

SNB published Version 1.7 of reporting forms (AUR_U, AUR_UEA, AUR_UES, AURH_U, AUR_K, AUR_KEA, and AURH_K) and the related documentation for supervisory reporting on an individual and consolidated basis.

January 15, 2019 WebPage Regulatory News

BCBS Finalizes Market Risk Capital Framework and Work Program for 2019

BCBS published the final framework for market risk capital requirements and its work program for 2019. Also published was an explanatory note to provide a non-technical description of the overall market risk framework, the changes that have been incorporated into in this version of the framework and impact of the framework.

January 14, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for January 2019

EBA published answers to 13 questions under the Single Rulebook question and answer (Q&A) updates for this week.

January 11, 2019 WebPage Regulatory News

PRA Proposes to Amend Supervisory Statement on Credit Risk Mitigation

PRA published the consultation paper CP1/19 that is proposing changes to the supervisory statement (SS17/13) on credit risk mitigation.

January 10, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2473