Banks with assets of less than $50 billion will get a one-year reprieve from making their stress tests and capital plans adhere to Basel III standards, the Federal Reserve Board said Tuesday.

The Basel III capital standards were finalized in July and take effect in 2014 or 2015, depending on the size of the bank. Meanwhile, the next stress-testing and capital planning cycle begins Oct. 1 and runs through the fourth quarter of 2015, overlapping with the rollout of the new Basel requirements. That overlap could have left some banks confused about which capital standards to use when conducting stress tests.

Banks with between $10 billion and $50 billion in total assets can use the Fed’s current regulatory-capital rules for the stress testing cycle that begins next week. The delay is intended to allow these smaller institutions time to adjust their internal systems to the new rules, the Fed said. They will have to employ Basel III standards in the testing cycle that starts in October 2014.

Banks with assets of $50 billion will have to account for the capital reforms in their next submissions. The Basel III standards increase banks’ minimum required leverage ratio, Tier 1 capital ratio and total risk-based capital ratio and change the way that these figures are calculated. However, the minimum Tier 1 common ratio against which their capital will be measured will remain 5%, as in previous cycles, the Fed said, because it is not a Basel ratio.

Companies below $10 billion assets do not have to submit annual company-run stress-tests. The cycle that starts next week will be the first in which banks with between $10 billion and $50 billion are required to submit their test results to the central bank.

The Fed will accept comment on the new rules through Nov. 25. The rules are effective immediately but subject to change.

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