The Federal Reserve today announced the final individual capital requirements for large banks, effective Oct. 1. The requirements are informed by the Fed’s stress test results.
In April, the Fed proposed a rule to average stress test results over two consecutive years to reduce year-over-year volatility from the test when calculating a bank’s capital requirement. If the rule is finalized as proposed, this year’s stress test results will be averaged with those from 2024, and updated capital requirements will be published separately, according to the Fed.
“As the board continues to fulfill its commitment to reducing year-over-year volatility and increasing transparency of the stress test, the individual capital requirements announced today represent a period of transition,” Fed Vice Chair for Supervision Michelle Bowman said in a statement. “Finalizing the rule proposed in April would be an important next step to reducing year-over-year volatility in bank capital requirements. This would allow the board to publish revised stress capital buffer requirements once the rule is finalized, based on averaged stress test results.”
