Federal Reserve Requires 18 Largest US Bank Holding Companies to Submit Stress Test Results

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On May 13, the Board of Governors (Board) of the Federal Reserve System announced that stress test results from the largest 18 US bank holding companies must be submitted to the Federal Reserve no later than July 5. Under the Board’s rule implementing stress test requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act for bank holding companies (BHCs) with total consolidated assets of $50 billion or more and nonbank financial companies supervised by the Board, a BHC that participated in the 2009 Supervisory Capital Assessment Program is required to conduct a mid-cycle company-run stress test in 2013. The mid-cycle stress test must be conducted using data as of March 31, 2013, and be based on scenarios developed by the BHC. The BHC must report the stress test results to the Board no later than July 5, 2013. In addition, the BHC must publicly disclose a summary of the results in the period between September 15 and September 30, 2013. Companies should conduct their stress tests in accordance with the expectations and principles set forth in the “Supervisory Guidance on Stress Testing for Banking Organizations with More Than $10 Billion in Total Consolidated Assets,” 77 Fed. Reg. 29458 (May 17, 2012). BHCs must use the FR Y-14A Summary schedule to report the results of their company-run stress tests and the FR Y-14A Scenario schedule to report the scenarios used in the mid-cycle stress tests. BHCs must provide information supporting their projections. In addition to the quantitative projections collected on the FR Y-14A, each BHC is also required to submit qualitative information supporting its projections. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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