Bank Capital Plans and Stress Tests: Federal Reserve Finalizes Attestation Requirement for Intermediate Holding Companies of Foreign Banking Organizations and Addresses the Introduction of the Supplementary Leverage Ratio as a Post-Stress Minimum Requirement for the 2017 CCAR Cycle

Sullivan & Cromwell LLP - December 22, 2016

Earlier today, the Federal Reserve published a final rule, initially proposed  on July 28, 2016, that will modify certain aspects of Forms FR Y-14A, FR Y-14Q and FR Y-14M (collectively, the “FR Y-14 Forms”) applicable to top-tier bank holding companies (“BHCs”) and foreign banking organizations’ U.S. intermediate holding companies (“IHCs”) that have $50 billion or more in total consolidated assets.
Most notably, the final rule requires that the chief financial officer or person performing an equivalent function (“CFO”) of those IHCs subject to the Federal Reserve’s Large Institution Supervision Coordinating Committee (“LISCC”) framework (“LISCC IHCs”) make attestations regarding reports on the FR Y-14 Forms.  Implementation of this attestation requirement for LISCC IHCs will follow a phased approach similar to the approach finalized for domestic BHC LISCC respondents in January of 2016,  but allowing an additional year for LISCC IHCs to implement the first attestation.  The first attestation for LISCC IHCs must be submitted with reports as of December 31, 2017 (attesting to the effectiveness of internal controls for the as-of date and not for submissions throughout the year), and will be fully phased in with reports submitted as of December 31, 2018 (attesting to the effectiveness of internal controls throughout the previous year).
The final rule also adopts, with certain clarifications, other changes contained in the initial proposal.  The Federal Reserve clarified that the Supplementary Leverage Ratio is a Post-Stress Minimum Requirement for the 2017 CCAR Cycle for all planning horizon periods beginning January 1, 2018.