The Board of Governors of the Federal Reserve System ("FRB") adopted a final rule that reduces the burden of capital plan and stress test requirements for certain bank holding companies. The final rule applies to bank holding companies with total consolidated assets ranging between $50 billion and $250 billion, on-balance sheet foreign exposure of less than $10 billion and non-bank assets of less than $75 billion.
For a bank holding company meeting the asset description (a "large and noncomplex" firm), this rule removes the qualitative assessment aspect of the Comprehensive Capital Analysis and Review ("CCAR") test. Under the rule, a large and noncomplex bank holding company still would be subject to a quantitative assessment of its capital adequacy, as well as periodic supervisory assessment of its capital planning process, but no longer would be subject to the more objective qualitative assessment of its internal capital planning process.
In response to comments received on the initial proposal, the FRB confirmed that it will:
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apply the expectations set forth in previous guidance (SR Letter 15-19) and conduct its review based on firm size and complexity;
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provide large and noncomplex firms with significant advance notice of the areas of focus of the annual capital plan review; and
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generally begin supervisory review of the capital plans of large and noncomplex firms in the third quarter of the year.
The final rule will be effective 30 days following its publication in the Federal Register.
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