The Federal Reserve today approved the capital plans of 30 out of 33 large banks participating in the Comprehensive Capital Analysis and Review. Only two banks — both foreign — saw their plans rejected, while one U.S. bank won a conditional “non-objection.”
The Fed’s annual CCAR evaluates the capital planning processes and capital adequacy of the largest banks, including their proposed capital actions such as dividend payments, share buybacks and issuances. The agency can object to a capital plan based on qualitative or quantitative concerns, and it considers factors such as a firm’s projected capital ratios under a hypothetical scenario of severe stress and the strength of the firm’s capital planning processes.
The Fed objected to capital plans from Deutsche Bank Trust Corp. and Santander Holdings USA on qualitative concerns. It did not object to Morgan Stanley’s plan but required it to submit a new one by the end of the fourth quarter to address certain issues in its capital planning processes.
The Fed noted that U.S. firms have substantially increased their capital since the first round of stress tests in 2009. The 33 bank holding companies in this year’s test have increased common equity capital by more than $700 billion since the beginning of 2009.