Banking Organization Capital Plans and Stress Tests: Federal Reserve Issues Instructions and Supervisory Scenarios for the 2018 Comprehensive Capital Analysis and Review and Dodd-Frank Act Stress Test Exercises

Sullivan & Cromwell LLP - February 5, 2018

On February 1, 2018, the Federal Reserve issued information applicable to the 2018 capital plan review process for bank holding companies (“BHCs”) with $50 billion or more in total consolidated assets and U.S. intermediate holding companies of foreign banking organizations. The Federal Reserve issuances included:

  • its annual summary instructions for its supervisory CCAR program for 2018, which include aspects relating to the quantitative assessment and the Federal Reserve’s disclosures regarding CCAR results, which are applicable to all firms, as well as aspects addressing the qualitative assessment, which are applicable only to firms subject to the Large Institution Supervision Coordination Committee framework and “large and complex firms” (those that are U.S. global systemically important BHCs (“G-SIBs”), or that have $250 billion or more of total consolidated assets or $75 billion or more of total nonbank assets);
  • a letter providing information on the 2018 horizontal capital review applicable to firms that are “large and noncomplex firms” (those that are not G-SIBs, and that have less than $250 billion of total consolidated assets and less than $75 billion of total nonbank assets); and
  • its three supervisory scenarios—baseline, adverse and severely adverse—and exogenous add-on components applicable to certain firms for CCAR 2018.