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Home > News & Events > Press Releases

Press Release
September 24, 2013

Federal Reserve Board issues interim final rules
clarifying how companies should incorporate
Basel III reforms into capital and business
projections
For immediate release
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The Federal Reserve Board on Tuesday issued two interim final rules
that clarify how companies should incorporate the Basel III regulatory
capital reforms into their capital and business projections during the next
cycle of capital plan submissions and stress tests.
Rules to implement the Basel III capital reforms in the United States
were finalized in July, and will be phased-in beginning in 2014 or 2015,
depending on the size of the banking organization. The planning horizon
for the next capital planning and stress testing cycle runs from the fourth
quarter of 2013 through the fourth quarter of 2015. Thus, the next capital
planning and stress testing cycle, which begins October 1, overlaps with
the implementation of the Basel III capital reforms.
The Board's first interim final rule applies to bank holding companies
with $50 billion or more in total consolidated assets. The rule clarifies
that in the next capital planning and stress testing cycle, these
companies must incorporate the revised capital framework into their
capital planning projections and into the stress tests required under the
Dodd-Frank Wall Street Reform and Consumer Protection Act using the
transition paths established in the Basel III final rule. This rule also
clarifies that for the upcoming cycle, capital adequacy at large banking

organizations would continue to be assessed against a minimum 5
percent tier 1 common ratio calculated in the same manner as under
previous stress tests and capital plan submissions, ensuring consistency
with those previous exercises.
The second interim final rule provides a one-year transition period for
most banking organizations with between $10 billion and $50 billion in
total consolidated assets. These companies this fall are conducting their
first company-run stress test under the Board's rules implementing the
Dodd-Frank Act. These companies will be required to calculate their
stress test projections using the Board's current regulatory capital rules
during the upcoming stress test to allow time to adjust their internal
systems to the revised capital framework.
The interim final rules also clarify that companies will not be required to
use the advanced approaches in the Basel III capital rules to calculate
their projected risk-weighted assets in a given capital planning and
stress testing cycle unless the companies have been notified by
September 30 of that year, prior to the start of that capital planning and
stress testing cycle.
The interim final rules are effective immediately. The Federal Reserve
will accept comments on the interim final rules through November 25,
2013, and the rules could be revised later in response to comments. In
addition, the Y-14 reporting instructions, which can be found at
www.federalreserve.gov/apps/reportforms/default.aspx, are being
updated to reflect these changes.
For media inquiries, call 202-452-2955
Federal Register notices:
Regulations Y and YY: Application of the Revised Capital Framework to
the Capital Plan and Stress Test Rules
PDF | HTML
Comments on this proposal: Submit
| View
Annual Company-Run Stress Tests at Banking Organizations With Total
Consolidated Assets of More Than $10 Billion But Less Than $50 Billion;
One-Year Transition Period to Revised Regulatory Capital Framework
for 2013-2014 Stress Test Cycle
PDF | HTML
Comments on this proposal: Submit | View

Application of the Revised Capital
Framework to the Capital Plan and
Stress Test Rules
Annual Company-Run Stress
Tests at Banking Organizations
with Total Consolidated Assets of
more than $10 Billion but less than
$50 Billion; One-Year Transition

Period to Revised Regulatory
Capital Framework for 2013-2014
Stress Test Cycle

Last Update: September 24, 2013

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