Fed Paper on Internal Capital Planning Procedures at Large Bank Holding Companies
| Date Published | 8/20/2013 |
| Author | Marja Hoek-Smit |
| Theme | Housing Finance Policy |
| Country |
Fed Paper on Internal Capital Planning Procedures at Large Bank holding companies
August 19, 2013
Many
large Bank Holding Companies (BCHs) subject to the Capital Plan Rule have made
substantial improvements incapital
planning over the last few years. There is, however, considerable room for
advancement according to this paper issued by the Federal Reserve on Monday
August 19.
In this paper, the Federal Reserve
discusses in detail it’s expectations for internal capital planning at the
large, complex BHCs subject to the Capital Plan Rule in light of the seven
principles of the Capital Adequacy Process. The discussion is based on the
range of practices it has observed at these companies during the last three annual
Comprehensive Capital Analysis and Review exercises. The Federal Reserve 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 purpose of this publication is
two-fold. First, it is intended to assist BHC management in assessing their
current capital planning processes and in designing and implementing
improvements to those processes. Second, it is intended to assist a broader audience
in understanding the key aspects of capital planning practices at large,
complex U.S. BHCs and the importance the Federal Reserve puts on ensuring that
these firms have robust capital resource.
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.
Link: Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice