Federal Reserve announces release dates of stress tests, CCAR results

The Federal Reserve Board announced last week that it will release the results from the latest supervisory stress tests on June 22 and the Comprehensive Capital Analysis and Review (CCAR) on June 28.

Both reviews must be conducted as part of the Dodd-Frank Act. The stress tests assess whether large bank holding companies have sufficient capital to absorb losses and continue operating during stressful economic and financial conditions over nine quarters.

The results of the supervisory tests conducted by the Federal Reserve will include data such as projected post-stress capital ratios, revenue, expense, and loss estimates under hypothetical adverse and severely adverse scenarios previously published by the Federal Reserve. The firms will separately release their company-run Dodd-Frank Act stress test results on or before July 7.

CCAR is an annual exercise undertaken by the Federal Reserve to assess whether large bank holding companies have forward-looking capital planning processes that account for their unique risks and are supported by sound risk-measurement and -management practices. As part of CCAR, the Federal Reserve evaluates each firm’s plans to make capital distributions, such as dividend payments, stock repurchases, as well as planned acquisitions.

In a change from last year, the qualitative portion of CCAR, which evaluates the strength of each firm’s capital planning processes, no longer applies to 21 firms with less complex operations. Instead, the capital planning processes of these firms will be evaluated in the normal course of supervision. The 13 larger and more complex firms continue to be subject to the qualitative assessment of CCAR.