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Home > News & Events > Press Releases

Press Release
November 01, 2013

Federal Reserve Board releases supervisory
scenarios and instructions for 2014 capital
planning and stress testing
For immediate release
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The Federal Reserve Board on Friday issued the supervisory scenarios
that will be used in the 2014 capital planning and stress testing program,
as well as instructions to firms with timelines for submissions. The
program includes the Comprehensive Capital Analysis and Review
(CCAR) of 30 bank holding companies with $50 billion or more of total
consolidated assets.
The aim of the annual reviews is to ensure that large financial
institutions have robust, forward-looking capital planning processes that
account for their unique risks, and to help ensure that they have
sufficient capital to continue operations throughout times of economic
and financial stress. Capital is important to banking organizations, the
financial system, and the economy broadly because it acts as a cushion
to absorb losses and helps to ensure that losses are borne by
shareholders, not taxpayers.
"The capital planning and stress testing program has been an integral
component of the Federal Reserve's broader supervisory and regulatory
efforts to make the financial system stronger and safer since the
financial crisis," Gov. Daniel K. Tarullo said.
Financial institutions submitting capital plans will be evaluated to ensure
they have sufficient capital to continue to lend to households and

businesses even under stressful conditions. In addition, they must
incorporate the transition requirements from the recently finalized Basel
III capital standards into their stress tests and capital plans.
CCAR includes an evaluation of institutions' plans to make capital
distributions, such as dividend payments or stock repurchases. The
Federal Reserve will approve capital distributions only for institutions
whose capital plans it approves and who demonstrate sufficient financial
strength even after making the planned capital distributions to continue
operating as financial intermediaries under stressful economic and
financial conditions.
Eighteen bank holding companies will be participating in the CCAR for
the fourth consecutive year in 2014. An additional 12 financial
institutions will be participating in CCAR for the first time during this
stress testing cycle.
The capital planning and stress testing program led by the Federal
Reserve since the financial crisis has contributed to a significant
increase in capital at the largest banking organizations in the United
States. The 18 bank holding companies have increased their aggregate
tier 1 common capital to $836 billion in the second quarter of 2013, the
period of most recent data, from $392 billion in the first quarter of 2009.
The tier 1 common ratio for these firms, which compares high-quality
capital to risk-weighted assets, has more than doubled to a weighted
average of 11.1 percent from 5.3 percent.
All 30 of the companies in the CCAR in 2014 must submit their capital
plans on or before January 6, 2014.
As in previous years, the Federal Reserve in March will release
summary results, including supervisory projections of capital ratios,
losses, and revenues under stress scenarios. For the first time in 2014,
the Federal Reserve will publish the results of stress tests conducted
under the supervisory adverse scenario. As in prior years, results of
stress tests under the severely adverse scenario will also be released.
The Federal Reserve will require institutions to use the supervisory
scenarios in both the stress tests conducted as part of the CCAR and in
the stress tests that are part of the Dodd-Frank Wall Street Reform and
Consumer Protection Act. Some companies that are not part of CCAR,
including state member bank subsidiaries of CCAR participants and
some companies with between $10 billion and $50 billion in assets, also
will use the supervisory scenarios for Dodd-Frank Act stress tests.
The baseline, adverse, and severely adverse scenarios include 28
variables, including economic activity, unemployment, exchange rates,
prices, incomes, and interest rates. To accompany the scenarios, the
Federal Reserve is publishing a narrative that describes the general
conditions surrounding the scenarios, changes to the scenarios from
previous years, and a general description of other variables that firms
may use in their stress tests.
As in prior years, six bank holding companies with large trading
operations will be required to factor in a global market shock as part of

their scenarios. The Federal Reserve will publish the components of the
global market shock soon. In addition, for the first time in 2014, eight
bank holding companies with substantial trading or custodial operations
will be required to incorporate a counterparty default scenario.
Previous CCAR
participants, also
participants in 2014

Participants new to
CCAR in 2014

Ally Financial Inc.

BMO Financial Corp.

American Express
Company

BBVA Compass
Bancshares, Inc.

Bank of America
Corporation

Comerica Inc.

Discover Financial
The Bank of New York Services
Mellon Corporation
HSBC North America
Holdings Inc.
BB&T Corporation

Global market shock Counterparty default
participants, 2014
participants, 2014
Bank of America
Corporation

Bank of America
Corporation

Citigroup Inc.

The Bank of New York
Mellon Corporation

The Goldman Sachs
Group, Inc.

Citigroup Inc.

Citigroup Inc.

JPMorgan Chase & Co. The Goldman Sachs
Group, Inc.
Morgan Stanley
JPMorgan Chase & Co.
Wells Fargo &
Morgan Stanley
Huntington Bancshares Company
Inc.
State Street
Corporation
M&T Bank Corp.

Fifth Third Bancorp

Northern Trust Corp.

The Goldman Sachs
Group, Inc.

RBS Citizens Financial
Group, Inc.

Capital One Financial
Corporation

JPMorgan Chase & Co. Santander Holdings
USA, Inc.
KeyCorp
UnionBanCal Corp.
Morgan Stanley
Zions Bancorp
The PNC Financial
Services Group, Inc.
Regions Financial
Corporation
State Street
Corporation
SunTrust Banks, Inc.
U.S. Bancorp
Wells Fargo &
Company

2014 Supervisory Scenarios for Annual Stress Tests Required under the
Dodd-Frank Act Stress Testing Rules and the Capital Plan Rule (PDF) |
HTML

Wells Fargo &
Company

Comprehensive Capital Analysis and Review 2014: Summary
Instructions and Guidance (PDF) | HTML

Related Information
Stress Tests and Capital Planning
For media inquiries, call 202-452-2955.

Last Update: November 01, 2013

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