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The Federal Reserve Board on Thursday proposed changes to the capital planning and stress testing process, including giving banks an additional three months to undertake the effort.
June 12 -
Observers expressed alarm over Monday's announcement that Bank of America submitted incorrect information to the Federal Reserve Board for its stress tests, saying it raises doubts about the credibility of the test.
April 28 -
The Federal Reserve Board denied the capital plans of Citigroup, HSBC, RBS Citizens, Santander and Zions in its second round of stress tests this year.
March 26
WASHINGTON The Federal Reserve Board issued a final rule Friday that will give banks an additional three months to comply with stress test requirements.
The changes will take effect in 2016, meaning timelines for the 2014-2015 stress tests will stay unchanged.
Under the new schedule, bank holding companies with over $50 billion in assets will submit capital plans and stress test results to the Fed by April 5 starting in 2016 based on financial information as of the end of the previous quarter. The current deadline for the 2015 cycle is Jan. 5.
The rule also shifts back deadlines for smaller state member banks those with between $10 and $50 billion in assets that under the Dodd-Frank Act must conduct "company-run" stress tests. Next year, those institutions must submit reports on their stress tests by March 31, but in 2016 the deadline will shift to July 31. The other federal bank regulators are expected to finalize similar changes for their institutions that are subject to the annual checkups.
The Fed rule, which was largely unchanged from its June proposal, includes other changes to the stress testing process. They include a restriction on a large banking firm's ability to make capital distributions resulting in actual capital issuance that is less than the figure indicated in its capital plan.
The central bank also released general instructions for large firms participating in the 2015 cycle of the Fed's Comprehensive Capital Analysis and Review, including details on the plan submission process, supervisory expectations related to the capital adequacy process and disclosures.
In a press release, the Fed said the changes "mark another step in the Federal Reserve's ongoing efforts to adapt and improve its capital planning and stress testing process" as the industry enters its fifth stress testing cycle.
"If supervisory stress testing and the associated review of capital planning processes are to give regulators, banks, and the public a dynamic view of the capital positions of large financial firms, they must respond to changes in the economy, the financial system, and risk-management capabilities," Fed Gov. Daniel Tarullo said in the press release.
