FRB has issued proposed rule to: revise the capital plan and stress test rules for bank holding companies with $50 billion or more in total consolidated assets and U.S. intermediate holding companies of foreign banks. Under the proposal, large and noncomplex firms would no longer be subject to the provisions of FRB’s capital plan rule whereby FRB may object to a capital plan on the basis of qualitative deficiencies in the firm’s capital planning process. In connection with this modification, large and noncomplex firms would no longer be subject to the qualitative assessment in Comprehensive Capital Analysis and Review (CCAR), but would remain subject to a quantitative assessment in CCAR.
The qualitative assessment of the capital plans of large and noncomplex firms instead would be conducted outside of CCAR through the supervisory review process. For purposes of the proposal, a bank holding company or U.S. intermediate holding company with total consolidated assets of $50 billion or greater but less than $250 billion, on balance sheet foreign exposure of less than $10 billion, and nonbank assets of less than $75 billion would be considered a large and noncomplex firm. The proposal would also modify reporting requirements for large and noncomplex firms to reduce burdens by raising materiality thresholds, reducing the scope of the data collection on these firms’ stress test results, and reducing supporting documentation requirements. For all bank holding companies subject to the capital plan rule, the proposal would simplify the initial applicability provisions for the capital plan and stress test rules, reduce the amount of additional capital distributions that a bank holding company may make during a capital plan cycle without seeking FRB’s prior approval, and extend the range of potential as-of dates for the trading and counterparty scenario component used in the stress test rules.
The proposal would also amend the Parent Company Only Financial Statements for Large Holding Companies to include new line item 17 of PC–B Memoranda (Total nonbank assets of a holding company that is subject to the Federal Reserve Board’s capital plan rule) for purposes of identifying the large and noncomplex firms. All other bank holding companies subject to the capital plan rule that are not large and noncomplex firms would remain subject to objection to their capital plan based on qualitative deficiencies under the rule. The proposal would not apply to bank holding companies with total consolidated assets of less than $50 billion or to any state member bank or savings and loan holding company. Comments are due 11/25/2016. The proposed rule may be viewed here. Federal Register, Vol. 81, No. 190, 09/30/2016, 67239-67260.