Fed final rule conforms capital planning requirements with 2019 framework

A final rule conforming the central bank’s capital planning requirements for large banking firms with the prudential framework adopted in 2019 was approved Tuesday by the Federal Reserve Board, the agency said.

The final rule is generally similar to the proposed rule issued last fall, the Fed said, with a key change: it applies capital planning requirements to large savings and loan holding companies that are not predominantly engaged in insurance or commercial activities.

The Fed Board in 2019 finalized a framework that sorts large banks into different categories based on their risks, with requirements that are tailored to the risks of each category. The board’s capital planning requirements for these large banks, the Fed explained, help ensure they plan for and determine their capital needs under a range of different scenarios.

Under the final rule, firms in the lowest risk category are on a two-year stress test cycle and not subject to company-run stress test requirements.

Tuesday’s final rule modifies the capital planning, regulatory reporting, and stress capital buffer requirements for firms subject to “Category IV” standards under the 2019 framework. It also makes changes to the board’s stress testing rules, the Stress Testing Policy Statement, and regulatory reporting requirements, such as the assumptions relating to business plan changes and capital actions and the publication of company-run stress test results for savings and loan holding companies.

Additionally, the final rule applies the capital planning and stress capital buffer requirements to covered saving and loan holding companies subject to Category II, Category III, and Category IV standards under the tailoring framework.

Federal Reserve Board finalizes a rule that updates the Board’s capital planning requirements to be consistent with other Board rules that were recently modified