Banking Organization Capital Plans and Stress Tests: Federal Reserve Issues Instructions, Guidance and Supervisory Scenarios for the 2017 Comprehensive Capital Analysis and Review Program

Sullivan & Cromwell LLP - February 6, 2017

On February 3, 2017, the Federal Reserve issued information applicable to the 2017 capital plan review programs for bank holding companies with $50 billion or more in total consolidated assets and U.S. intermediate holding companies of foreign banking organizations, for each of three main categories of CCAR firms. The Federal Reserve issuances included:

  • its annual summary instructions for its supervisory CCAR program for 2017 applicable to firms subject to the Large Institution Supervision Coordination Committee framework and “large and complex firms” (those that are global systemically important BHCs, or that have $250 billion or more of total consolidated assets or $75 billion or more of total nonbank assets);
  • three letters: one setting forth information on the qualitative assessment applicable to the capital plans of LISCC firms or large and complex firms that are newly formed IHCs (“New IHCs”) of foreign banking organizations; one providing information on the 2017 “horizontal capital review” applicable to CCAR 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 a third setting forth the enhancements to the Federal Reserve’s supervisory models used to estimate post-stress capital ratios used in the Dodd-Frank Act Stress Test program; and
  • its three supervisory scenarios—base, adverse and severely adverse—for CCAR 2017.