FED amended the capital plan rule to limit use of "qualitative objection" in the Comprehensive Capital Analysis and Review (CCAR) exercise, effective for the 2019 cycle. The changes to the capital plan rule become effective immediately. FED also released instructions for the CCAR exercise for the 2019 cycle. FED published the list of 18 firms that will be subject to the CCAR exercise this year, with five of those firms being subject to a possible qualitative objection.
The amendment to the capital plan rule limits the scope of potential objections to a firm’s capital plan on the basis of qualitative deficiencies in the firm’s capital planning process (qualitative objection). FED will no longer issue a qualitative objection under the capital plan rule to a firm if the firm has been subject to a potential qualitative objection for four consecutive years and the firm does not receive a qualitative objection in the fourth year of that period. In addition, except for certain firms that have received a qualitative objection in the (immediate) prior year, FED will no longer issue a qualitative objection to any firm effective January 01, 2021. While the qualitative objection will no longer apply to certain firms, all firms will continue to be subject to a rigorous evaluation of their capital planning processes as part of CCAR. Firms with weak practices may be subject to a deficient supervisory rating, and potentially an enforcement action, for failing to meet supervisory expectations. In addition, all firms remain subject to a potential objection on quantitative grounds.
Effective Date: March 06, 2019
Keywords: Americas, US, Banking, Stress Testing, CCAR, Capital Plan Rule, Instructions, FED
Previous ArticleFED Decides Not to Impose Countercyclical Capital Buffer
HKMA is consulting on revisions to 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.
PRA provided further information on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address the challenges arising from COVID-19 outbreak.
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.
ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.