The Federal Reserve today approved the capital plans of 34 large banks participating in the Comprehensive Capital Analysis and Review. One bank won a conditional “non-objection” and must submit a new capital plan by the end of the fourth quarter to address certain issues in its capital planning processes. But for the first time, all institutions were found to meet minimum capital requirements even under severely adverse conditions.
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 noted that U.S. firms have substantially increased their capital since the first round of stress tests in 2009. The 34 bank holding companies in this year’s test have increased common equity capital by more than $750 billion since the beginning of 2009.
