The Federal Reserve today did not object to the capital plans of 18 large banks participating in the Comprehensive Capital Analysis and Review. The board is requiring one bank to address limited weaknesses identified from the test, but on balance, virtually all firms are now meeting the Fed’s capital planning expectations, the agency said.
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 plan based on qualitative or quantitative concerns, and it considers factors such as the firm’s projected capital ratio under a hypothetical scenario of severe stress and the strength of the firm’s capital planning process.
The results of this year’s CCAR cycle showed that the firms have significantly increased their capital since the first round of tests in 2009. The 18 bank holding companies in this year’s test have increased common equity capital from $300 billion to roughly $800 billion during that time.