On August 19, one day before issuing its notice of proposed rulemaking on bolstering leverage ratio standards (as discussed above in “Agencies Seek to Bolster Leverage Ratio Standards for Largest Banks”), the Board of Governors of the Federal Reserve System (Board) issued a paper on capital planning for large banks. The paper, Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice, “is intended to promote better capital planning at bank holding companies generally, and to provide greater clarity on the standards against which those practices are evaluated as part of the CCAR [Comprehensive Capital Analysis and Review] exercise. In particular, the Board emphasized that bank holding companies, when considering their capital needs, should focus on the specific risks they could face under potentially stressful conditions.”
In its evaluation, the Board found that firms needed to improve a number of aspects of their capital planning processes, “including their accounting for risks most relevant to the specific business activities, their methods of projecting the effect of certain stresses on their capital needs, and their governance of the capital planning processes.”
The Federal Reserve will start the 2014 CCAR process in the fall. In addition to the 18 firms that participated in 2013, 12 firms with more than $50 billion in total assets that have not previously been part of the CCAR are expected to participate.
On August 16, the Board issued a final rule establishing annual assessment fees for its supervision and regulation of large financial companies. The final rule outlines how the Board determines which companies are charged, estimates the applicable expenses, determines each company’s assessment fee and bills for and collects the assessment fees for large banks.