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
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

Related Articles
News

ECB Updates Validation Checks and List of Identifiers Under AnaCredit

ECB updated the AnaCredit validation checks (Version 1.4) and the list of national identifiers (version 2.4) for AnaCredit reporting.

March 21, 2019 WebPage Regulatory News
News

BCBS Publishes Results of the Basel III Monitoring Exercise

BCBS published results of the Basel III monitoring exercise based on data as of June 30, 2018.

March 20, 2019 WebPage Regulatory News
News

EBA, FCA, and PRA Agree on MoU Template for Supervisory Cooperation

EBA, FCA, and PRA announced that they have agreed on a template for the Memorandum of Understanding (MoU) that sets out the expectations for supervisory cooperation and information-sharing arrangements between UK and EU/European Economic Area national authorities.

March 20, 2019 WebPage Regulatory News
News

HKMA Publishes CoP on Loss-Absorbing Capacity Requirements of Banks

HKMA issued, in relation to the Financial Institutions Resolution (Loss-Absorbing Capacity Requirements—Banking Sector) Rules (LAC Rules) a chapter of a code of practice (LAC CoP) under section 196 of the Financial Institutions Resolution Ordinance (FIRO).

March 20, 2019 WebPage Regulatory News
News

EBA Publishes Reports Monitoring the Implementation of Basel III in EU

EBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU.

March 20, 2019 WebPage Regulatory News
News

BCBS Publishes Results of Survey on Proportionality in Bank Regulation

BCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.

March 19, 2019 WebPage Regulatory News
News

US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy Swaps

US Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.

March 19, 2019 WebPage Regulatory News
News

HKMA Expects Banks to Manage Risks Related to Crypto-Asset Exposures

HKMA issued a statement announcing that it expects authorized institutions to take note of the BCBS statement on crypto-assets and its prudential expectations.

March 18, 2019 WebPage Regulatory News
News

SNB Issues Form on Solvency Risk of Counterparties in Interbank Sector

SNB released form (Version 5.00) and related documentation for reporting solvency risk of counterparties in the interbank sector.

March 18, 2019 WebPage Regulatory News
News

EIOPA Requests Data on LTG Measures from Insurers Under Solvency II

EIOPA has requested the European Economic Area insurance undertakings, which are subject to Solvency II, to provide information on the long-term guarantee (LTG) measures.

March 18, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2769