FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020. The minimum capital requirements for a large bank comprise the minimum capital requirements, the stress capital buffer, and, if applicable, a capital surcharge for global systemically important banks, or G-SIBs. As per the announcement, the minimum common equity tier 1 capital ratio is the same for all banks at 4.5% and the stress capital buffer, which is determined from the stress test results, ranges from 2.5% to 7.8%. Finally, the G-SIB surcharge that has been prescribed for eight banks ranges from 1% for State Street Corporation to 3.5% for JPMorgan Chase & Co. Overall, Goldman Sachs Group, Inc. and Morgan Stanley have the highest capital requirements at 13.7% and 13.4%, respectively.
FED also affirmed the stress test results for five firms that requested reconsideration. Those firms are BMO Financial Corporation, Capital One Financial Corporation, Citizens Financial Group, Inc., The Goldman Sachs Group Inc., and Regions Financial Corporation. The reconsideration process involved an independent group—separate from the stress testing group—that analyzed and evaluated the results. The results were checked for errors and to ensure that the stress test models, which project the loan losses for banks, worked as intended and were consistent with the stress test framework of FED. As FED is done with input gained from a variety of stakeholders and events, including its annual stress test model symposium, FED will assess the information learned from the reconsideration process and use it to continue improving its stress testing methodology.
Related Link: Press Release
Effective Date: October 01, 2020
Keywords: Americas, US, Banking, Regulatory capital, CET1, Stress Capital Buffer, G-SIB Surcharge, Stress Testing, Basel, FED
Previous ArticleBundesbank Publishes Deactivated Validation Rules for Reporting
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.