Sullivan & Cromwell discusses Bank Capital Plans and Stress Tests

Federal Reserve Issues Interim Final Rules Addressing Application of New Basel III-Based Capital Framework for Purposes of the 2013-2014 Capital Plan and Stress Test Cycle

The Federal Reserve recently issued two interim final rules that clarify how covered companies must incorporate the new U.S. Basel III-based final capital rules (the “Basel III Capital Rules”) into their capital plan submissions and Dodd-Frank Act stress tests for the upcoming 2013-2014 cycle.

To address and clarify the potential issues created by the interaction of the overlap of the nine-quarter planning horizon of the Federal Reserve’s current version of the capital plan

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Sullivan & Cromwell on Dodd-Frank Stress Tests

[In May], the Board of Governors of the Federal Reserve System (the “Federal Reserve”) issued summary instructions for the 2013 company-run, mid-year stress tests required by Section 165(i)(2)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Under applicable Federal Reserve regulations, bank holding companies with total consolidated assets of $50 billion or more are required to conduct these mid-year stress tests using company-generated baseline, adverse and severely adverse macroeconomic scenarios. For the 2013 mid-year cycle, however, only the 18 bank holding companies that participated in the Federal Reserve’s 2009 Supervisory Capital Assessment Program are required to conduct … Read more

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