Featured Product

    FED Releases Results of Supervisory Stress Tests for Banks

    June 21, 2018

    FED published the results of the 2018 supervisory stress tests for banks. The results show that the nation's largest bank holding companies are strongly capitalized and would be able to lend to households and businesses during a severe global recession. This year's exercise tested 35 participating bank holding companies during the nine quarters.

    The most severe hypothetical scenario projects USD 578 billion in total losses by participating banks. The "severely adverse" scenario, the most stringent scenario yet used in the FED stress tests, features a severe global recession with the U.S. unemployment rate rising by almost 6 percentage points to 10%, accompanied by a steepening Treasury yield curve. The firms' aggregate common equity tier 1 capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual level of 12.3% in the fourth quarter of 2017 to a minimum level of 7.9% in the hypothetical stress scenario. Since 2009, the 35 firms have added about USD 800 billion in common equity capital.

    The FED stress scenarios assume deliberately stringent and conservative hypothetical economic and financial market conditions. The results are not forecasts or expected outcomes. This is the eighth round of stress tests led FED since 2009 and the sixth round required by the Dodd-Frank Act. The 35 firms tested this year represent about 80% of the assets of all banks operating in the U.S. FED uses its own independent projections of losses and incomes for each firm. The Dodd-Frank Act stress tests are one component of FED's analysis during the Comprehensive Capital Analysis and Review (CCAR), which is an annual exercise to evaluate the capital planning processes and capital adequacy of large bank holding companies. CCAR results will be released on Thursday, June 28.

    Additionally, FED announced that to be consistent with the recently passed Economic Growth, Regulatory Reform, and Consumer Protection Act, bank holding companies with less than USD 100 billion in consolidated assets are no longer subject to supervisory stress testing, including both the Dodd-Frank Act stress tests and CCAR. Consequently, FED will not include CIT Group Inc., Comerica Incorporated, and Zions Bancorporation in this year's results and future cycles. FED will have further information on its implementation of the new law at a later date.

     

    Related Links

    Keywords: Americas, US, Banking, Stress Testing, DFAST, CCAR, FED

    Featured Experts
    Related Articles
    News

    ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks

    ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.

    September 18, 2020 WebPage Regulatory News
    News

    EBA Provides Opinion on Definition of Credit Institution in CRR

    EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).

    September 18, 2020 WebPage Regulatory News
    News

    APRA Consults on Alignment of Daily Liquidity Report for Banks

    APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.

    September 17, 2020 WebPage Regulatory News
    News

    FED Releases Scenarios for Second Round of Stress Tests on Banks

    FED released hypothetical scenarios for a second round of stress tests for banks.

    September 17, 2020 WebPage Regulatory News
    News

    PRA Announces Update on Supervisory Benchmarking Portfolio Exercise

    PRA published updates in relation to the 2021 Supervisory Benchmarking Portfolio exercise.

    September 14, 2020 WebPage Regulatory News
    News

    FED Revises and Extends Capital Assessment and Stress Testing Reports

    FED adopted a proposal to extend for three years, with revision, the capital assessments and stress testing reports (FR Y-14A/Q/M; OMB No. 7100-0341).

    September 14, 2020 WebPage Regulatory News
    News

    HKMA Updates Policy Module for Non-Centrally Cleared OTC Derivatives

    HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.

    September 11, 2020 WebPage Regulatory News
    News

    EBA Updates List of Validation Rules for Reporting by Banks

    EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.

    September 10, 2020 WebPage Regulatory News
    News

    EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework

    EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).

    September 10, 2020 WebPage Regulatory News
    News

    NGFS Advocates Environmental Risk Analysis for Financial Sector

    NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.

    September 10, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5803