[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]
[Rules and Regulations]
[Pages 59779-59791]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23618]


=======================================================================
-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM

12 CFR Parts 225 and 252

[Docket No. R-1463; RIN 7100 AE-01]


Regulations Y and YY: Application of the Revised Capital 
Framework to the Capital Plan and Stress Test Rules

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: Interim final rule with request for comment.

-----------------------------------------------------------------------

SUMMARY: The Board invites comment on an interim final rule that amends 
the capital plan and stress test rules to require a bank holding 
company with total consolidated assets of $50 billion or more to 
estimate its tier 1 common ratio using the methodology currently in 
effect in 2013 under the existing capital guidelines (not the rules as 
revised on July 2, 2013). The interim final rule also clarifies when a 
banking organization would estimate its minimum regulatory capital 
ratios using the advanced approaches for a given capital plan and 
stress test cycle and makes minor, technical changes to the capital 
plan rule.

DATES: This rule is effective on September 30, 2013. Comments must be 
received on or before November 25, 2013.

ADDRESSES: You may submit comments, identified by Docket R-1463 and RIN 
No. 7100 AE 01, by any of the following methods:
    Agency Web site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    Email: regs.comments@federalreserve.gov. Include docket number in 
the subject line of the message.
    Facsimile: (202) 452-3819 or (202) 452-3102.
    Mail: Robert deV. Frierson, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW., 
Washington, DC 20551.
    All public comments are available from the Board's Web site at 
http://www.federalreserve.gov/apps/foia/proposedregs.aspx as submitted, 
unless modified for technical reasons. Accordingly, your comments will 
not be edited to remove any identifying or contact information. Public 
comments may also be viewed electronically or in paper form in Room MP-
500 of the Board's Martin Building (20th and C Streets NW.) between 9 
a.m. and 5 p.m. on weekdays.

FOR FURTHER INFORMATION CONTACT: Lisa Ryu, Deputy Associate Director, 
(202) 263-4833, Constance Horsley, Manager, (202) 452-5239, or Ann 
McKeehan, Senior Supervisory Financial Analyst, (202) 973-6903, 
Division of Banking Supervision and Regulation; Laurie Schaffer, 
Associate General Counsel, (202) 452-2272, Ben McDonough, Senior 
Counsel, (202) 452-2036, or Christine Graham, Senior Attorney, (202) 
452-3005, Legal Division, Board of Governors of the Federal Reserve 
System, 20th Street and Constitution Avenue NW., Washington, DC 20551. 
Users of Telecommunication Device for Deaf (TDD) only, call (202) 263-
4869.

SUPPLEMENTARY INFORMATION:

I. Background

    On July 2, 2013, the Board approved revised risk-based and leverage 
capital requirements for banking organizations that implement the Basel 
III regulatory capital reforms and certain changes required by the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (revised 
capital framework).\1\ The revised capital framework introduces a new 
common equity tier 1 capital ratio and supplementary leverage ratio, 
raises the minimum tier 1 ratio and, for certain banking organizations, 
leverage ratio, implements strict eligibility criteria for regulatory 
capital instruments, and

[[Page 59780]]

introduces a standardized methodology for calculating risk-weighted 
assets. The new minimum regulatory capital ratios and the eligibility 
criteria for regulatory capital instruments will begin to take effect 
as of January 1, 2014, subject to transition provisions, for banking 
organizations that meet the criteria for the advanced approaches rule 
(advanced approaches banking organizations).\2\ All other banking 
organizations must begin to comply with the revised capital framework 
beginning on January 1, 2015.
---------------------------------------------------------------------------

    \1\ See, Regulatory Capital Rules: Regulatory Capital, 
Implementation of Basel III, Capital Adequacy, Transition 
Provisions, Prompt Corrective Action, Standardized Approach for 
Risk-weighted Assets, Market Discipline and Disclosure Requirements, 
Advanced Approaches Risk-Based Capital Rule, and Market Risk Capital 
Rule (July 2, 2013), available at: http://www.federalreserve.gov/newsevents/press/bcreg/20130702a.htm (revised capital framework).
    \2\ A banking organization is subject to the advanced approaches 
rule if it has consolidated assets greater than or equal to $250 
billion, if it has total consolidated on-balance sheet foreign 
exposures of at least $10 billion, or if it elects to apply the 
advanced approaches rule.
---------------------------------------------------------------------------

    As the revised regulatory capital framework comes into effect, 
banking organizations will be required to reflect the new capital rules 
in their capital plans submitted under the Board's capital plan rule 
and in their stress tests conducted under the Board's rules 
implementing the stress test requirements of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act.

II. Capital Plan Rule

    Pursuant to the Board's capital plan rule and Board's related 
supervisory process, the Comprehensive Capital Analysis and Review 
(CCAR), the Board assesses the internal capital planning process of a 
bank holding company with total consolidated assets of $50 billion or 
more (large bank holding company) and its ability to maintain 
sufficient capital to continue its operations under expected and 
stressful conditions.\3\ Under the capital plan rule, a large bank 
holding company is required to submit an annual capital plan to the 
Board that contains estimates of its minimum regulatory capital ratios 
and its tier 1 common ratio under expected conditions and under a range 
of stressed scenarios over a nine-quarter planning horizon (planning 
horizon).\4\ A capital plan also must include a discussion of how the 
large bank holding company will maintain a pro forma tier 1 common 
ratio above 5 percent under expected conditions and stressed 
scenarios.\5\
---------------------------------------------------------------------------

    \3\ 76 FR 74631 (Dec. 1, 2011) (codified at 12 CFR 225.8) 
(capital plan rule).
    \4\ See generally 12 CFR 225.8.
    \5\ Id. at Sec.  225.8(d)(2)(i)(B).
---------------------------------------------------------------------------

    The tier 1 common ratio is a measure that the Federal Reserve has 
used for supervisory purposes during and after the financial crisis, 
including CCAR--it is not a minimum capital requirement.\6\ The capital 
plan rule defines the tier 1 common ratio as the ratio of a bank 
holding company's tier 1 common capital to its total risk-weighted 
assets. Tier 1 common capital is defined as tier 1 capital less non-
common elements in tier 1 capital, including perpetual preferred stock 
and related surplus, minority interest in subsidiaries, trust preferred 
securities and mandatory convertible preferred securities.\7\ The 5 
percent threshold reflected a supervisory assessment of the minimum 
capital needed to provide a high level of confidence that a BHC can 
continue to be a going concern throughout stressful conditions and on a 
post-stress basis, based on an analysis of the historical distribution 
of earnings by large banking organizations.\8\
---------------------------------------------------------------------------

    \6\ 76 FR 74631, 74636 (December 1, 2011).
    \8\ Basel Committee on Banking Supervision, Calibrating 
regulatory minimum capital requirements and capital buffers: A top-
down approach (October 2010), available at http://www.bis.org/publ/bcbs180.htm.
---------------------------------------------------------------------------

    The preamble to the capital plan rule noted that the Basel III 
framework proposed by the Basel Committee on Bank Supervision includes 
a different definition of tier 1 common capital and that the Board and 
the other federal banking agencies continued to work on implementing 
Basel III in the United States.\9\ The capital plan rule's definition 
of ``tier 1 common ratio'' states that the definition will remain in 
effect until the Board adopts an alternative tier 1 common ratio 
definition as a minimum regulatory capital ratio.\10\
---------------------------------------------------------------------------

    \9\ 76 FR 74631, 74637 (December 1, 2011).
    \10\ Id.at Sec.  225.8(c)(9).
---------------------------------------------------------------------------

III. Stress Test Rules

    The Board's stress test rules for large bank holding companies and 
nonbank financial companies supervised by the Board establish a 
framework for the Board to conduct annual supervisory stress tests to 
evaluate whether these companies have the capital necessary to absorb 
losses as a result of adverse economic conditions and require these 
companies to conduct semi-annual company-run stress tests.\11\ Under 
the supervisory stress tests, the Board uses data as of September 30 of 
each year to assess a covered company's capital levels and regulatory 
capital ratios and its tier 1 common ratio, over the nine-quarter 
planning horizon of a given stress test cycle.\12\ Similarly, the 
annual and semi-annual stress tests conducted by a covered company 
require it to report, among other elements, its regulatory capital 
ratios, including its tier 1 common ratio, for each quarter of a nine-
quarter planning horizon.\13\ The stress test rule defines the tier 1 
common ratio by cross-reference to the capital plan rule, which, as 
previously described, provides that the tier 1 common ratio is to 
remain in effect until the Board adopts an alternative tier 1 common 
ratio definition.\14\
---------------------------------------------------------------------------

    \11\ 77 FR 62378 (Oct. 12, 2012) (codified at 12 CFR part 252, 
subparts F and G). The changes in this interim final rule will apply 
to nonbank financial companies supervised by the Board after they 
become subject to stress test requirements.
    \12\ 12 CFR 252.134(a).
    \13\ Id. at 252.146(a).
    \14\ Id. at 252.132(q), 252.142(t).
---------------------------------------------------------------------------

IV. Incorporating the Revised Capital Framework Into Capital Plan and 
Stress Tests

    Because the revised capital framework introduces a methodology for 
computing a common equity tier 1 capital ratio and a new minimum common 
equity tier 1 capital ratio, it is necessary to clarify how bank 
holding companies should calculate their tier 1 common ratio for the 
upcoming capital plan and stress test cycle.
    With respect to a bank holding company's estimates of its 
regulatory capital ratios and the applicable minimum capital 
requirements, the bank holding company must project its regulatory 
capital ratios and meet the minimum capital requirements for each 
quarter of the planning horizon in accordance with the minimum capital 
requirements that are in effect during that quarter. Accordingly, under 
the revised capital framework, a bank holding company that is an 
advanced approaches banking organization would be required to calculate 
its common equity tier 1 capital ratio beginning in 2014, in accordance 
with the transition period arrangements, and meet a 4.0 percent minimum 
in 2014 and a 4.5 percent minimum in 2015. A bank holding company that 
is not advanced approaches banking organizations would be required to 
calculate its common equity tier 1 capital ratio beginning in 2015, in 
accordance with the transition period arrangements, and meet a 4.5 
percent minimum in 2015. A state member bank that is a subsidiary of a 
bank holding company with total consolidated assets of $50 billion or 
more will reflect the new capital rules in the same manner as its bank 
holding company parent in projecting its capital for the upcoming 
stress test cycle.
    With respect to a bank holding company's estimates of the tier 1 
common ratio, the bank holding company must use the definitions of tier 
1 capital and total risk-weighted assets currently in effect in 2013 
under the existing capital guidelines for each quarter of the planning 
horizon, and not incorporate the new definition of

[[Page 59781]]

common equity tier 1 that is part of the revised capital framework that 
will become effective in 2014 and 2015. Preserving the tier 1 common 
ratio methodology maintains consistency with previous capital plan 
cycles during the phase-in of the new common equity tier 1 capital 
minimum requirement. Moreover, the new minimum common equity tier 1 
capital ratio will be phased in over several years. Using the new 
methodology with the lower first year phase-in minimum ratio for the 
capital plan and stress test cycle that begins October 1, 2013, would 
likely result in large bank holding companies being subject to a common 
equity capital standard in the first quarters of the planning horizon 
that is less stringent than the standard used in previous capital plan 
and stress test cycles. Once the new minimum common equity tier 1 
capital ratio reaches its permanent level of 4.5 percent in 2015, the 
Board expects that the combination of changes in the methodology for 
computing the common equity tier 1 ratio and the minimum level of 4.5 
percent will be more stringent than the current capital plan tier 1 
common ratio of 5.0 percent. Under the new common equity tier 1 capital 
definition, most elements of accumulated other comprehensive income 
(AOCI), such as gains and losses on available-for-sale debt securities, 
will flow through to common equity, except in the case of non-advanced 
approaches banking organizations that make an AOCI opt-out 
election.\15\ In addition, more assets will be subject to deduction, 
including investments in unconsolidated financial institutions and all 
deferred tax assets that arise from operating losses and tax credit 
carry forwards.
---------------------------------------------------------------------------

    \15\ See Revised capital framework, Sec.  ------.22(b)(2).
---------------------------------------------------------------------------

    Table 1 illustrates the minimum common equity capital ratios to 
which large bank holding companies will be subject in the capital plan 
and stress test cycles that begin October 1, 2013.

                         Table 1--Common Equity Ratios Applicable to Large Bank Holding Companies in the Capital Plan and Stress Test Cycles That Begin October 1, 2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                     Q4 2013           Q1 2014           Q2 2014           Q3 2014           Q4 2014           Q1 2015           Q2 2015           Q3 2015           Q4 2015
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Advanced approaches bank        Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C
 holding companies.              ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%
                                                  CET1 ratio of     CET1 ratio of     CET1 ratio of     CET1 ratio of     CET1 ratio of     CET1 ratio of     CET1 ratio of     CET1 ratio of
                                                   4.0%.             4.0%.             4.0%.             4.0%.             4.5%.             4.5%.             4.5%.             4.5%.
Non-advanced approaches bank    Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C       Current T1C
 holding companies.              ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%.    ratio of 5.0%
                                                                                                                          CET1 ratio of     CET1 ratio of     CET1 ratio of     CET1 ratio of
                                                                                                                           4.5%.             4.5%.             4.5%.             4.5%.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Current T1C ratio: the ratio of a bank holding company's tier 1 common capital calculated using the definitions in place as of the effective date of the interim final rule (i.e., tier 1
  capital as defined under Appendix A of 12 CFR part 225, less the non-common elements of tier 1 capital, over total risk-weighted assets as defined under Appendices A, E, and G of 12 CFR part
  225).
CET1 ratio: a bank holding company's common equity tier 1 capital ratio as calculated under 12 CFR part 217, including the transition provisions of 12 CFR part Sec.   217.300, as applicable
  within each quarter of the capital plan and stress test cycles that begin October 1, 2013.

V. Parallel Run Notification Date

    In light of the issuance of the revised capital framework, the 
Board is also providing clarity on when a banking organization would be 
required to estimate its minimum regulatory capital ratios over the 
planning horizon using the advanced approaches for a given capital 
planning and stress testing cycle.
    A bank holding company that is an advanced approaches banking 
organization is required to use the advanced approaches to calculate 
its minimum regulatory capital ratios if it has conducted a 
satisfactory parallel run, which is defined as a period of no less than 
four consecutive calendar quarters during which a banking organization 
complies with certain qualification requirements of the advanced 
approaches.\16\ Currently, all advanced approaches banking 
organizations are in parallel run, but it is possible that firms could 
complete a satisfactory parallel run in the near term and, as a result, 
be required to calculate their regulatory capital ratios using the 
advanced approaches Under the current capital plan rule and stress test 
rule, an advanced approaches banking organization would be required to 
estimate its capital ratios over the planning horizon using the 
advanced approaches if the firm is notified any time before January 5, 
which is the date on which a banking organization must submit its 
capital plan and its stress test results to the Board.
---------------------------------------------------------------------------

    \16\ 12 CFR part 225, Appendix G, section 21(c).
---------------------------------------------------------------------------

    In order to provide additional notice to an advanced approaches 
banking organization regarding when it must begin to estimate its 
advanced approaches regulatory capital ratios under stressed conditions 
in a given capital plan or stress test cycle, the interim final rule 
provides that a bank holding company must be notified that it has 
completed its parallel run by September 30 of a given year in order to 
be required to estimate its capital ratios using the advanced 
approaches for the capital plan or stress test cycle that begins on 
October 1 of that year.

VI. Technical Changes

    The interim final rule makes minor technical changes to the capital 
plan rule. It clarifies that a covered company that has not filed the 
FR Y-9C report for the four most recent consecutive quarters will 
calculate its total consolidated assets as reported on the company's 
available FR Y-9C reports for the most recent quarter or consecutive 
quarters. It clarifies that the Board (or the Reserve Bank, with 
concurrence of the Board) may extend the resubmission period for a 
capital plan beyond an initial 60 day extension if the Board or Reserve 
Bank determines that such longer period is appropriate.
    The interim final rule modifies the capital plan rule to reflect 
the Board's current practice of publicly disclosing its decision to 
object or not object to a bank holding company's capital plan along 
with a summary of the Board's analyses of that company. The rule 
provides that any disclosure will occur by March 31 of each calendar 
year, unless the Board determines that another date is appropriate. 
With regard to the Board's review of bank holding companies' capital 
plans, the Board expects the summary results largely will be similar to 
the results disclosed in previous CCAR exercises, unless the Board 
determines that different or

[[Page 59782]]

additional disclosures would be appropriate.
    The interim final rule also corrects a typographical numbering 
error and removes the clarification of the start of the stress test 
cycle for the stress test cycle that began in 2012.

VII. Effective Date; Solicitation of Comments

    This interim final rule is effective September 30, 2013. Pursuant 
to the Administrative Procedure Act (APA), at 5 U.S.C. 553(b)(B), 
notice and comment are not required prior to the issuance of a final 
rule if an agency, for good cause, finds that ``notice and public 
procedure thereon are impracticable, unnecessary, or contrary to the 
public interest.'' \17\ Similarly, a final rule may be published with 
an immediate effective date if an agency finds good cause and publishes 
such with the final rule.\18\
---------------------------------------------------------------------------

    \17\ 5 U.S.C. 553(b)(B).
    \18\
---------------------------------------------------------------------------

    Consistent with section 553(b)(B) of the APA, the Board finds that 
issuing this rule as an interim final rule is necessary to clarify how 
a large bank holding company must incorporate the revised capital 
framework adopted July 2, 2013, into its capital plan and stress tests 
for purposes of the capital plan and stress test cycles that begin 
October 1, 2013. This interim final rule also clarifies when a bank 
holding company would be required to calculate its minimum regulatory 
capital ratios using the advanced approaches for a given capital plan 
and stress testing cycle. Obtaining notice and comment prior to issuing 
the interim final rule would be impracticable and contrary to the 
public interest. The capital rules were only recently revised and the 
short effective date of those revisions provide good cause to publish 
the interim final rule with an immediate effective date in order to 
remove uncertainty about the standards in the capital plan rule and 
reduce the burden of requiring firms to change their capital 
calculations in advance of the effective date.
    The approval by the Board of the revised capital framework in July, 
2013, prompted a need to clarify how a large bank holding company would 
incorporate these rules into its capital plan and stress tests for the 
capital plan and stress test cycles that begin October 1, 2013. In 
addition, the definition of ``tier 1 common ratio'' used in the capital 
plan rule, and incorporated by cross reference in the stress test 
rules, stated that the definition would remain in effect until the 
Board had adopted an alternative tier 1 common ratio definition as a 
minimum regulatory capital ratio.\19\ The approach taken in the interim 
final rule is consistent with the Board's previous interpretations of 
the capital plan and stress test rules.\20\ It also ensures that the 
tier 1 common ratio is no less stringent than the ratio used in 
previous cycles.
---------------------------------------------------------------------------

    \19\ Id.at Sec.  225.8(c)(9).
    \20\ See Federal Reserve System Comprehensive Capital Analysis 
and Review: Summary Instructions and Guidance (November 22, 2011), 
available at: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20111122d1.pdf.
---------------------------------------------------------------------------

    In addition, the interim final rule provides that a bank holding 
company must be notified that it has completed its parallel run by 
September 30 of a given year in order to be required to estimate its 
capital ratios using the advanced approaches for that year's capital 
plan or stress test cycle. This change provides clearer notice to an 
advanced approaches banking organization so that it could anticipate 
when it will be required to calculate its regulatory capital ratios 
using the advanced approaches in a given capital plan or stress test 
cycle.
    Moreover, the interim final rule should not impose any incremental 
burden on these firms. The interim final rule relieves burden on them 
by clarifying the process for their upcoming capital plan submissions 
and company-run stress tests and providing additional time to build 
systems and processes necessary to effectively implement in a stress 
test the regulatory capital requirements of the advanced approaches 
rules.
    Although notice and comment are not required prior to the effective 
date of this interim final rule, the Board invites comment on all 
aspects of this rulemaking and will revise this interim final rule if 
necessary or appropriate in light of the comments received. The Board 
is seeking comments on all aspects of the interim final rule. In 
particular:
    Question 1. What, if any, additional transitional arrangements 
should the Board consider for future capital plan and stress test 
cycles? Should the Board remove the capital plan's tier 1 common ratio 
of 5.0 percent, or conversely, maintain the tier 1 common ratio of 5.0 
percent, but require bank holding companies to calculate the ratio 
using the more stringent definition of capital?
    Question 2. What, if any, modifications should be made to the 
advanced approaches notification date to better facilitate the timely 
notification of advanced approaches banking organizations of their need 
to use the advanced approaches in estimating their regulatory capital 
ratios for the capital plan and stress test purposes?

VIII. Regulatory Analysis

A. Regulatory Flexibility Act Analysis

    The Board has considered the potential impact of the interim final 
rule on small companies in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 603(b)). Based on its analysis and for the reasons stated 
below, the Board believes that the interim final rule will not have a 
significant economic impact on a substantial number of small entities. 
Nevertheless, the Board is publishing a regulatory flexibility 
analysis.
    For the reason discussed in the Supplementary Information above, 
the agencies are issuing this interim final rule to clarify the 
requirements for certain companies required to submit capital plans to 
the Board on January 5, 2014, and conduct Dodd-Frank Act company run 
stress tests in the stress test cycle that commences on October 1, 
2013. Under regulations issued by the Small Business Administration 
(``SBA''), a small entity includes a depository institution, bank 
holding company, or savings and loan holding company with total assets 
of $500 million or less (a small banking organization). The interim 
final rule would apply to bank holding companies with total 
consolidated asset of $50 billion or more and nonbank financial 
companies supervised by the Board. Companies that would be subject to 
the interim finale rule therefore substantially exceed the $500 million 
total asset threshold at which a company is considered a small company 
under SBA regulations. In light of the foregoing, the Board does not 
believe that the interim final rule would have a significant economic 
impact on a substantial number of small entities.

B. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act required the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The Board invites comment on how to 
make this interim final rule easier to understand. For example:
     Has the Board organized the material to suit your needs? 
If not, how could the rule be more clearly stated?
     Are the requirements in the rule clearly stated? If not, 
how could the rule be more clearly stated?
     Do the regulations contain technical language or jargon 
that is not clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation

[[Page 59783]]

easier to understand? If so, what changes would make the regulation 
easier to understand?
     Would more, but shorter, sections be better? If so, which 
sections should be changed?
     What else could the Board do to make the regulation easier 
to understand?

C. Paperwork Reduction Act

    This interim final rule references currently approved collections 
of information under the Paperwork Reduction Act (44 U.S.C. 3501-3520) 
provided for in the capital plan rules. This interim final rule does 
not introduce any new collections of information nor does it 
substantively modify the collections of information that Office of 
Management and Budget (OMB) has approved. Therefore, no Paperwork 
Reduction Act submissions to OMB are required.

List of Subjects

12 CFR Part 225

    Administrative practice and procedure; Banks, banking; Capital 
Planning; Holding companies; Reporting and recordkeeping requirements; 
Securities, Stress Testing.

12 CFR Part 252

    Administrative practice and procedure, Banks, Banking, Capital 
Planning; Federal Reserve System, Holding companies, Reporting and 
recordkeeping requirements, Securities, Stress Testing.

Authority and Issuance

    For the reasons stated in the Supplementary Information, the Board 
of Governors of the Federal Reserve System amends 12 CFR chapter II as 
follows:

PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL 
(REGULATION Y)


0
1. The authority citation for part 225 continues to read as follows:

    Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1, 
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331-3351, 3906, 
3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805.

Subpart A--General Provisions


0
2. Revise Sec.  225.8 to read as follows:


Sec.  225.8  Capital planning.

    (a) Purpose. This section establishes capital planning and prior 
notice and approval requirements for capital distributions by certain 
bank holding companies.
    (b) Scope and effective date. (1) This section applies to every 
top-tier bank holding company domiciled in the United States:
    (i) With average total consolidated assets of $50 billion or more. 
Average total consolidated assets means the average of the total 
consolidated assets as reported by a bank holding company on its 
Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) 
for the four most recent consecutive quarters. If the bank holding 
company has not filed the FR Y-9C for each of the four most recent 
consecutive quarters, average total consolidated assets means the 
average of the company's total consolidated assets, as reported on the 
company's FR Y-9C, for the most recent quarter or consecutive quarters. 
Average total consolidated assets are measured on the as-of date of the 
most recent FR Y-9C used in the calculation of the average; or
    (ii) That is subject to this section, in whole or in part, by order 
of the Board based on the institution's size, level of complexity, risk 
profile, scope of operations, or financial condition.
    (2) Beginning on December 23, 2011, the provisions of this section 
shall apply to any bank holding company that is subject to this section 
pursuant to paragraph (b)(1), provided that:
    (i) Until July 21, 2015, this section will not apply to any bank 
holding company subsidiary of a foreign banking organization that is 
currently relying on Supervision and Regulation Letter SR 01-01 issued 
by the Board (as in effect on May 19, 2010, available at http://www.federalreserve.gov/boarddocs/srletters/2001/sr0101.htm); and
    (ii) A bank holding company that becomes subject to this section 
pursuant to paragraph (b)(1)(i) after the 5th of January of a calendar 
year shall not be subject to the requirements of paragraphs (d)(1)(ii), 
(d)(4), and (f)(1)(iii) of this section until January 1 of the next 
calendar year.
    (3) Notwithstanding any other requirement in this section, for a 
given capital plan cycle (including the January 5 submission of a 
capital plan under paragraph (d)(1) of this section and any 
resubmission of the capital plan under paragraph (d)(4) of this section 
during the capital plan cycle), a bank holding company's estimates of 
its pro forma regulatory capital ratios and its pro forma tier 1 common 
ratio over the planning horizon shall not include estimates using the 
advanced approaches if the bank holding company is notified on or after 
the first day of that capital plan cycle (October 1) that the bank 
holding company is required to calculate its risk-based capital 
requirements using the advanced approaches.
    (4) Nothing in this section shall limit the authority of the 
Federal Reserve to issue a capital directive or take any other 
supervisory or enforcement action, including action to address unsafe 
or unsound practices or conditions or violations of law.
    (c) Definitions. For purposes of this section, the following 
definitions apply:
    (1) Advanced approaches means the risk-weighted assets calculation 
methodologies at 12 CFR part 225, appendix G, and 12 CFR part 217, 
subpart E, as applicable, and any successor regulation.
    (2) Capital action means any issuance of a debt or equity capital 
instrument, any capital distribution, and any similar action that the 
Federal Reserve determines could impact a bank holding company's 
consolidated capital.
    (3) Capital distribution means a redemption or repurchase of any 
debt or equity capital instrument, a payment of common or preferred 
stock dividends, a payment that may be temporarily or permanently 
suspended by the issuer on any instrument that is eligible for 
inclusion in the numerator of any minimum regulatory capital ratio, and 
any similar transaction that the Federal Reserve determines to be in 
substance a distribution of capital.
    (4) Capital plan means a written presentation of a bank holding 
company's capital planning strategies and capital adequacy process that 
includes the mandatory elements set forth in paragraph (d)(2) of this 
section.
    (5) Capital plan cycle means the period beginning on October 1 of a 
calendar year and ending on September 30 of the following calendar 
year.
    (6) Capital policy means a bank holding company's written 
assessment of the principles and guidelines used for capital planning, 
capital issuance, usage and distributions, including internal capital 
goals; the quantitative or qualitative guidelines for dividend and 
stock repurchases; the strategies for addressing potential capital 
shortfalls; and the internal governance procedures around capital 
policy principles and guidelines.
    (7) Minimum regulatory capital ratio means any minimum regulatory 
capital ratio that the Federal Reserve may require of a bank holding 
company, by regulation or order, including, as applicable, the bank 
holding company's tier 1 and supplementary leverage ratios and common 
equity tier 1, tier 1, and total risk-based capital ratios as 
calculated under appendices A, D, E, and G to this part (12 CFR part 
225) and

[[Page 59784]]

12 CFR part 217, as applicable, including the transition provisions at 
12 CFR 217.1(f)(4) and 12 CFR 217.300, or any successor regulation.
    (8) Planning horizon means the period of at least nine quarters, 
beginning with the quarter preceding the quarter in which the bank 
holding company submits its capital plan, over which the relevant 
projections extend.
    (9) Tier 1 capital has the same meaning as under appendix A to this 
part or under 12 CFR part 217, as applicable, or any successor 
regulation.
    (10) Tier 1 common capital means tier 1 capital as defined under 
appendix A to this part less the non-common elements of tier 1 capital, 
including perpetual preferred stock and related surplus, minority 
interest in subsidiaries, trust preferred securities and mandatory 
convertible preferred securities.
    (11) Tier 1 common ratio means the ratio of a bank holding 
company's tier 1 common capital to total risk-weighted assets as 
defined under appendices A and E to this part.
    (d) General requirements--(1) Annual capital planning. (i) A bank 
holding company must develop and maintain a capital plan.
    (ii) A bank holding company must submit its complete capital plan 
to the appropriate Reserve Bank and the Board each year by the 5th of 
January, or such later date as directed by the Board or the appropriate 
Reserve Bank, with concurrence of the Board.
    (iii) The bank holding company's board of directors or a designated 
committee thereof must at least annually and prior to submission of the 
capital plan under paragraph (d)(1)(ii) of this section:
    (A) Review the robustness of the bank holding company's process for 
assessing capital adequacy,
    (B) Ensure that any deficiencies in the bank holding company's 
process for assessing capital adequacy are appropriately remedied; and
    (C) Approve the bank holding company's capital plan.
    (2) Mandatory elements of capital plan. A capital plan must contain 
at least the following elements:
    (i) An assessment of the expected uses and sources of capital over 
the planning horizon that reflects the bank holding company's size, 
complexity, risk profile, and scope of operations, assuming both 
expected and stressful conditions, including:
    (A) Estimates of projected revenues, losses, reserves, and pro 
forma capital levels, including any minimum regulatory capital ratios 
(for example, leverage, tier 1 risk-based, and total risk-based capital 
ratios) and any additional capital measures deemed relevant by the bank 
holding company, over the planning horizon under expected conditions 
and under a range of stressed scenarios, including any scenarios 
provided by the Federal Reserve and at least one stressed scenario 
developed by the bank holding company appropriate to its business model 
and portfolios;
    (B) A calculation of the pro forma tier 1 common ratio over the 
planning horizon under expected conditions and under a range of 
stressed scenarios and discussion of how the company will maintain a 
pro forma tier 1 common ratio above 5 percent under expected conditions 
and the stressed scenarios required under paragraphs (d)(2)(i)(A) and 
(ii) of this section;
    (C) A discussion of the results of any stress test required by law 
or regulation, and an explanation of how the capital plan takes these 
results into account; and
    (D) A description of all planned capital actions over the planning 
horizon.
    (ii) A detailed description of the bank holding company's process 
for assessing capital adequacy, including:
    (A) A discussion of how the bank holding company will, under 
expected and stressful conditions, maintain capital commensurate with 
its risks, maintain capital above the minimum regulatory capital ratios 
and above a tier 1 common ratio of 5 percent, and serve as a source of 
strength to its subsidiary depository institutions;
    (B) A discussion of how the bank holding company will, under 
expected and stressful conditions, maintain sufficient capital to 
continue its operations by maintaining ready access to funding, meeting 
its obligations to creditors and other counterparties, and continuing 
to serve as a credit intermediary;
    (iii) The bank holding company's capital policy; and
    (iv) A discussion of any expected changes to the bank holding 
company's business plan that are likely to have a material impact on 
the firm's capital adequacy or liquidity.
    (3) Data collection. Upon the request of the Board or appropriate 
Reserve Bank, the bank holding company shall provide the Federal 
Reserve with information regarding--
    (i) The bank holding company's financial condition, including its 
capital;
    (ii) The bank holding company's structure;
    (iii) Amount and risk characteristics of the bank holding company's 
on- and off-balance sheet exposures, including exposures within the 
bank holding company's trading account, other trading-related exposures 
(such as counterparty-credit risk exposures) or other items sensitive 
to changes in market factors, including, as appropriate, information 
about the sensitivity of positions to changes in market rates and 
prices;
    (iv) The bank holding company's relevant policies and procedures, 
including risk management policies and procedures;
    (v) The bank holding company's liquidity profile and management; 
and
    (vi) Any other relevant qualitative or quantitative information 
requested by the Board or the appropriate Reserve Bank to facilitate 
review of the bank holding company's capital plan under this section.
    (4) Re-submission of a capital plan. (i) A bank holding company 
must update and re-submit its capital plan to the appropriate Reserve 
Bank within 30 calendar days of the occurrence of one of the following 
events:
    (A) The bank holding company determines there has been or will be a 
material change in the bank holding company's risk profile, financial 
condition, or corporate structure since the bank holding company 
adopted the capital plan;
    (B) The Board or the appropriate Reserve Bank objects to the 
capital plan; or
    (C) The Board or the appropriate Reserve Bank, with concurrence of 
the Board, directs the bank holding company in writing to revise and 
resubmit its capital plan for any of the following reasons:
    (1) The capital plan is incomplete or the capital plan, or the bank 
holding company's internal capital adequacy process, contains material 
weaknesses;
    (2) There has been or will likely be a material change in the bank 
holding company's risk profile (including a material change in its 
business strategy or any risk exposure), financial condition, or 
corporate structure;
    (3) The stressed scenario(s) developed by the bank holding company 
is not appropriate to its business model and portfolios, or changes in 
financial markets or the macro-economic outlook that could have a 
material impact on a bank holding company's risk profile and financial 
condition require the use of updated scenarios; or
    (4) The capital plan or the condition of the bank holding company 
raise any of the issues described in paragraph (e)(2)(ii) of this 
section.
    (ii) The Board or the appropriate Reserve Bank, with concurrence of 
the Board, may, at its discretion, extend the

[[Page 59785]]

30-day period in paragraph (d)(4)(i) of this section for up to an 
additional 60 calendar days, or such longer period as the Board or the 
appropriate Reserve Bank, with concurrence of the Board, determines 
appropriate.
    (iii) Any updated capital plan must satisfy all the requirements of 
this section; however, a bank holding company may continue to rely on 
information submitted as part of a previously submitted capital plan to 
the extent that the information remains accurate and appropriate.
    (e) Review of capital plans by the Federal Reserve; publication of 
summary results--(1) Considerations and inputs. (i) The Board or the 
appropriate Reserve Bank, with concurrence of the Board, will consider 
the following factors in reviewing a bank holding company's capital 
plan:
    (A) The comprehensiveness of the capital plan, including the extent 
to which the analysis underlying the capital plan captures and 
addresses potential risks stemming from activities across the firm and 
the company's capital policy;
    (B) The reasonableness of the bank holding company's assumptions 
and analysis underlying the capital plan and its methodologies for 
reviewing the robustness of its capital adequacy process; and
    (C) The bank holding company's ability to maintain capital above 
each minimum regulatory capital ratio and above a tier 1 common ratio 
of 5 percent on a pro forma basis under expected and stressful 
conditions throughout the planning horizon, including but not limited 
to any stressed scenarios required under paragraph (d)(2)(i)(A) and 
(ii) of this section.
    (ii) The Board or the appropriate Reserve Bank, with concurrence of 
the Board, will also consider the following information in reviewing a 
bank holding company's capital plan:
    (A) Relevant supervisory information about the bank holding company 
and its subsidiaries;
    (B) The bank holding company's regulatory and financial reports, as 
well as supporting data that would allow for an analysis of the bank 
holding company's loss, revenue, and reserve projections;
    (C) As applicable, the Federal Reserve's own pro forma estimates of 
the firm's potential losses, revenues, reserves, and resulting capital 
adequacy under expected and stressful conditions, including but not 
limited to any stressed scenarios required under paragraph (d)(2)(i)(A) 
and (ii) of this section, as well as the results of any stress tests 
conducted by the bank holding company or the Federal Reserve; and
    (D) Other information requested or required by the appropriate 
Reserve Bank or the Board, as well as any other information relevant, 
or related, to the bank holding company's capital adequacy.
    (2) Federal Reserve action on a capital plan. (i) The Board or the 
appropriate Reserve Bank, with concurrence of the Board, will object, 
in whole or in part, to the capital plan or provide the bank holding 
company with a notice of non-objection to the capital plan:
    (A) By March 31 of the calendar year in which a capital plan was 
submitted pursuant to paragraph (d)(1)(ii) of this section, and
    (B) By the date that is 75 calendar days after the date on which a 
capital plan was resubmitted pursuant to paragraph (d)(4) of this 
section.
    (ii) The Board or the appropriate Reserve Bank, with concurrence of 
the Board, may object to a capital plan if it determines that:
    (A) The bank holding company has material unresolved supervisory 
issues, including but not limited to issues associated with its capital 
adequacy process;
    (B) The assumptions and analysis underlying the bank holding 
company's capital plan, or the bank holding company's methodologies for 
reviewing the robustness of its capital adequacy process, are not 
reasonable or appropriate;
    (C) The bank holding company has not demonstrated an ability to 
maintain capital above each minimum regulatory capital ratio and above 
a tier 1 common ratio of 5 percent, on a pro forma basis under expected 
and stressful conditions throughout the planning horizon; or
    (D) The bank holding company's capital planning process or proposed 
capital distributions otherwise constitute an unsafe or unsound 
practice, or would violate any law, regulation, Board order, directive, 
or any condition imposed by, or written agreement with, the Board. In 
determining whether a capital plan or any proposed capital distribution 
would constitute an unsafe or unsound practice, the appropriate Reserve 
Bank would consider whether the bank holding company is and would 
remain in sound financial condition after giving effect to the capital 
plan and all proposed capital distributions.
    (iii) The Board or the appropriate Reserve Bank, with concurrence 
of the Board, will notify the bank holding company in writing of the 
reasons for a decision to object to a capital plan.
    (iv) If the Board or the appropriate Reserve Bank, with concurrence 
of the Board, objects to a capital plan and until such time as the 
Board or the appropriate Reserve Bank, with concurrence of the Board, 
issues a non-objection to the bank holding company's capital plan, the 
bank holding company may not make any capital distribution, other than 
those capital distributions with respect to which the Board or the 
appropriate Reserve Bank has indicated in writing its non-objection.
    (v) The Board may disclose publicly its decision to object or not 
object to a bank holding company's capital plan under this section, 
along with a summary of the Board's analyses of that company. Any 
disclosure under this paragraph (e)(2)(v) will occur by March 31, 
unless the Board determines that a later disclosure date is 
appropriate.
    (3) Request for reconsideration or hearing. Within 10 calendar days 
of receipt of a notice of objection to a capital plan by the Board or 
the appropriate Reserve Bank:
    (i) A bank holding company may submit a written request to the 
Board requesting reconsideration of the objection, including an 
explanation of why reconsideration should be granted. Within 10 
calendar days of receipt of the bank holding company's request, the 
Board will notify the company of its decision to affirm or withdraw the 
objection to the bank holding company's capital plan or a specific 
capital distribution; or
    (ii) As an alternative to paragraph (e)(3)(i) of this section, a 
bank holding company may submit a written request to the Board for a 
hearing. Any hearing shall follow the procedures described in paragraph 
(f)(5)(ii) through (iii) of this section.
    (f) Approval requirements for certain capital actions--(1) 
Circumstances requiring approval. Notwithstanding a notice of non-
objection under paragraph (e)(2)(i) of this section a bank holding 
company may not make a capital distribution under the following 
circumstances, unless it receives approval from the Board or 
appropriate Reserve Bank pursuant to paragraph (f)(4) of this section:
    (i) After giving effect to the capital distribution, the bank 
holding company would not meet a minimum regulatory capital ratio or a 
tier 1 common ratio of at least 5 percent;
    (ii) The Board or the appropriate Reserve Bank, with concurrence of 
the Board, notifies the company in writing that the Federal Reserve has 
determined that the capital distribution would result in a material 
adverse change to the organization's capital or liquidity

[[Page 59786]]

structure or that the company's earnings were materially 
underperforming projections;
    (iii) Except as provided in paragraph (f)(2) of this section, the 
dollar amount of the capital distribution will exceed the amount 
described in the capital plan for which a non-objection was issued 
under this section; or
    (iv) The capital distribution would occur after the occurrence of 
an event requiring resubmission under paragraphs (d)(4)(i)(A) and (C) 
of this section and before the Federal Reserve acted on the resubmitted 
capital plan.
    (2) Exception for well capitalized bank holding companies. (i) A 
bank holding company may make a capital distribution for which the 
dollar amount exceeds the amount described in the capital plan for 
which a non-objection was issued under this section if the following 
conditions are satisfied:
    (A) The bank holding company is, and after the capital distribution 
would remain, well capitalized as defined in Sec.  225.2(r) of 
Regulation Y (12 CFR 225.2(r));
    (B) The bank holding company's performance and capital levels are, 
and after the capital distribution would remain, consistent with its 
projections under expected conditions as set forth in its capital plan 
under this paragraph (d)(2)(i);
    (C) The annual aggregate dollar amount of all capital distributions 
(beginning on April 1 of a calendar year and ending on March 31 of the 
following calendar year) would not exceed the total amounts described 
in the company's capital plan for which the bank holding company 
received a notice of non-objection by more than 1.00 percent multiplied 
by the bank holding company's tier 1 capital, as reported to the 
Federal Reserve on the bank holding company's first quarter FR Y-9C;
    (D) The bank holding company provides the appropriate Reserve Bank 
with notice 15 calendar days prior to a capital distribution that 
includes the elements described in paragraph (f)(3) of this section; 
and
    (E) The Board or the appropriate Reserve Bank, with concurrence of 
the Board, does not object to the transaction proposed in the notice. 
In determining whether to object to the proposed transaction, the Board 
or the appropriate Reserve Bank, with concurrence of the Board, shall 
apply the criteria described in paragraph (f)(4)(iv) of this section.
    (ii) The exception in this paragraph (f)(2) shall not apply if the 
Board or the appropriate Reserve Bank notifies the bank holding company 
in writing that it may not take advantage of this exception.
    (3) Contents of request. (i) A request for a capital distribution 
under this section shall be filed with the appropriate Reserve Bank and 
the Board and shall contain the following information:
    (A) The bank holding company's current capital plan or an 
attestation that there have been no changes to the capital plan since 
it was last submitted to the Federal Reserve;
    (B) The purpose of the transaction;
    (C) A description of the capital distribution, including for 
redemptions or repurchases of securities, the gross consideration to be 
paid and the terms and sources of funding for the transaction, and for 
dividends, the amount of the dividend(s); and
    (D) Any additional information requested by the Board or the 
appropriate Reserve Bank (which may include, among other things, an 
assessment of the bank holding company's capital adequacy under a 
revised stress scenario provided by the Federal Reserve, a revised 
capital plan, and supporting data).
    (ii) Any request submitted with respect to a capital distribution 
described in paragraph (f)(1)(i) of this section shall also include a 
plan for restoring the bank holding company's capital to an amount 
above a minimum level within 30 days and a rationale for why the 
capital distribution would be appropriate.
    (4) Approval of certain capital distributions. (i) A bank holding 
company must obtain approval from the Board or the appropriate Reserve 
Bank, with concurrence of the Board, before making a capital 
distribution described in paragraph (f)(1) of this section.
    (ii) A request for a capital distribution under this section must 
be filed with the appropriate Reserve Bank and contain all the 
information set forth in paragraph (f)(3) of this section.
    (iii) The Board or the appropriate Reserve Bank, with concurrence 
of the Board, will act on a request under this paragraph (f)(4) within 
30 calendar days after the receipt of a complete request under 
paragraph (f)(4)(ii) of this section. The Board or the appropriate 
Reserve Bank may, at any time, request additional information that it 
believes is necessary for its decision.
    (iv) In acting on a request under this paragraph, the Board or 
appropriate Reserve Bank will apply the considerations and principles 
in paragraph (e) of this section. In addition, the Board or the 
appropriate Reserve Bank may disapprove the transaction if the bank 
holding company does not provide all of the information required to be 
submitted under paragraphs (f)(3) and (f)(5)(iii) of this section.
    (5) Disapproval and hearing. (i) The Board or the appropriate 
Reserve Bank will notify the bank holding company in writing of the 
reasons for a decision to disapprove any proposed capital distribution. 
Within 10 calendar days after receipt of a disapproval by the Board, 
the bank holding company may submit a written request for a hearing.
    (ii) The Board will order a hearing within 10 calendar days of 
receipt of the request if it finds that material facts are in dispute, 
or if it otherwise appears appropriate. Any hearing conducted under 
this paragraph shall be held in accordance with the Board's Rules of 
Practice for Formal Hearings (12 CFR part 263).
    (iii) At the conclusion of the hearing, the Board will by order 
approve or disapprove the proposed capital distribution on the basis of 
the record of the hearing.

PART 252--ENHANCED PRUDENTIAL STANDARDS (Regulation YY).

0
3. The authority citation for part 252 continues to read as follows:

    Authority:  12 U.S.C. 321-338a, 1467a(g), 1818, 1831p-1, 
1844(b), 1844(c), 5361, 5365, 5366.


0
4. Subpart F to part 252 is revised to read as follows:

Subpart F--Supervisory Stress Test Requirements for Covered 
Companies

Sec.
252.131 Authority and purpose.
252.132 Definitions.
252.133 Applicability
252.134 Annual analysis conducted by the Board.
252.135 Data and information required to be submitted in support of 
the Board's analyses.
252.136 Review of the Board's analysis; publication of summary 
results.
252.137 Use requirement.


Sec.  252.131  Authority and purpose.

    (a) Authority. 12 U.S.C. 321-338a, 1467a(g), 1818, 1831p-1, 
1844(b), 1844(c), 5361, 5365, 5366.
    (b) Purpose. This subpart implements section 165(i)(1) of the Dodd-
Frank Act (12 U.S.C. 5365(i)(1)), which requires the Board to conduct 
annual analyses of nonbank financial companies supervised by the Board 
and bank holding companies with $50 billion or more in total 
consolidated assets to evaluate whether such companies have the 
capital, on a total consolidated basis, necessary to absorb losses as a 
result of adverse economic conditions.

[[Page 59787]]

Sec.  252.132  Definitions.

    For purposes of this subpart F, the following definitions apply:
    (a) Advanced approaches means the risk-weighted assets calculation 
methodologies at 12 CFR part 225, appendix G, and 12 CFR part 217, 
subpart E, as applicable, and any successor regulation.
    (b) Adverse scenario means a set of conditions that affect the U.S. 
economy or the financial condition of a covered company that are more 
adverse than those associated with the baseline scenario and may 
include trading or other additional components.
    (c) Average total consolidated assets means the average of the 
total consolidated assets as reported by a bank holding company on its 
Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) 
for the four most recent consecutive quarters. If the bank holding 
company has not filed the FR Y-9C for each of the four most recent 
consecutive quarters, average total consolidated assets means the 
average of the company's total consolidated assets, as reported on the 
company's FR Y-9C, for the most recent quarter or consecutive quarters. 
Average total consolidated assets are measured on the as-of date of the 
most recent FR Y-9C used in the calculation of the average.
    (d) Bank holding company has the same meaning as in Sec.  225.2(c) 
of the Board's Regulation Y (12 CFR 225.2(c)).
    (e) Baseline scenario means a set of conditions that affect the 
U.S. economy or the financial condition of a covered company and that 
reflect the consensus views of the economic and financial outlook.
    (f) Covered company means:
    (1) A bank holding company (other than a foreign banking 
organization) with average total consolidated assets of $50 billion or 
more; and
    (2) A nonbank financial company supervised by the Board.
    (g) Depository institution has the same meaning as in section 3 of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).
    (h) Foreign banking organization has the same meaning as in Sec.  
211.21(o) of the Board's Regulation K (12 CFR 211.21(o)).
    (i) Nonbank financial company supervised by the Board means a 
nonbank financial company that the Financial Stability Oversight 
Council has determined under section 113 of the Dodd-Frank Act (12 
U.S.C. 5323) shall be supervised by the Board and for which such 
determination is still in effect.
    (j) Planning horizon means the period of at least nine quarters, 
beginning on the first day of a stress test cycle (on October 1) over 
which the relevant projections extend.
    (k) Pre-provision net revenue means the sum of net interest income 
and non-interest income less expenses before adjusting for loss 
provisions.
    (l) Provision for loan and lease losses means the provision for 
loan and lease losses as reported by the covered company on the FR Y-
9C.
    (m) Regulatory capital ratio means a capital ratio for which the 
Board established minimum requirements for the company by regulation or 
order, including, as applicable, the company's tier 1 and supplementary 
leverage ratios and common equity tier 1, tier 1, and total risk-based 
capital ratios as calculated under appendices A, D, E, and G to this 
part (12 CFR part 225) and 12 CFR part 217, as applicable, including 
the transition provisions at 12 CFR 217.1(f)(4) and 12 CFR 217.300, or 
any successor regulation.
    (n) Scenarios are those sets of conditions that affect the U.S. 
economy or the financial condition of a covered company that the Board 
annually determines are appropriate for use in the supervisory stress 
tests, including, but not limited to, baseline, adverse, and severely 
adverse scenarios.
    (o) Severely adverse scenario means a set of conditions that affect 
the U.S. economy or the financial condition of a covered company and 
that overall are more severe than those associated with the adverse 
scenario and may include trading or other additional components.
    (p) Stress test cycle means the period between October 1 of a 
calendar year and September 30 of the following calendar year.
    (q) Subsidiary has the same meaning as in Sec.  225.2(o) the 
Board's Regulation Y (12 CFR 225.2).
    (r) Tier 1 common ratio has the same meaning as in the Board's 
Regulation Y (12 CFR 225.8).


Sec.  252.133  Applicability.

    (a) Compliance date for bank holding companies that are covered 
companies as of November 15, 2012--(1) In general. Except as provided 
in paragraph (a)(2) or (3) of this section, a bank holding company that 
is a covered company as of November 15, 2012, must comply with the 
requirements of this subpart beginning with the stress test cycle that 
commences on October 1, 2013, unless that time is extended by the Board 
in writing.
    (2) 2009 Supervisory Capital Assessment Program. A bank holding 
company that participated in the 2009 Supervisory Capital Assessment 
Program, or a successor to such a bank holding company, must comply 
with the requirements of this subpart beginning with the stress test 
cycle that commences on November 15, 2012, unless that time is extended 
by the Board in writing.
    (3) SR Letter 01-01. A U.S.-domiciled bank holding company that is 
a covered company as of November 15, 2012, and is a subsidiary of a 
foreign banking organization that is currently relying on Supervision 
and Regulation Letter SR 01-01 issued by the Board (as in effect on May 
19, 2010) must comply with the requirements of this subpart beginning 
with the stress test cycle that commences on October 1, 2015, unless 
that time is extended by the Board in writing.
    (b) Compliance date for institutions that become covered companies 
after November 15, 2012--(1) Bank holding companies. A bank holding 
company that becomes a covered company after November 15, 2012, must 
comply with the requirements of this subpart beginning with the stress 
test cycle that commences in the calendar year after the year in which 
the bank holding company becomes a covered company, unless that time is 
extended by the Board in writing.
    (2) Nonbank financial companies supervised by the Board. A company 
that becomes a nonbank financial company supervised by the Board must 
comply with the requirements of this subpart beginning with the stress 
test cycle that commences in the calendar year after the year in which 
the company first becomes subject to the Board's minimum regulatory 
capital requirements, unless the Board accelerates or extends the 
compliance date.
    (c) Ongoing application. A bank holding company that is a covered 
company will remain subject to the requirements of this subpart unless 
and until its total consolidated assets fall below $50 billion for each 
of four consecutive quarters, as reported on the FR Y-9C. The 
calculation will be effective on the as-of date of the fourth 
consecutive FR Y-9C.
    (d) Advanced approaches. Notwithstanding any other requirement in 
this section, the Board's analysis of a covered company's capital in a 
given stress test cycle will not include estimates using the advanced 
approaches if the covered company is notified on or after the first day 
of that stress test cycle (October 1) that the covered company is 
required to calculate its risk-based capital

[[Page 59788]]

requirements using the advanced approaches.


Sec.  252.134  Annual analysis conducted by the Board.

    (a) In general. (1) On an annual basis, the Board will conduct an 
analysis of each covered company's capital, on a total consolidated 
basis, taking into account all relevant exposures and activities of 
that covered company, to evaluate the ability of the covered company to 
absorb losses in specified economic and financial conditions.
    (2) The analysis will include an assessment of the projected 
losses, net income, and pro forma capital levels and regulatory capital 
ratios, tier 1 common ratio, and other capital ratios for the covered 
company and use such analytical techniques that the Board determines 
are appropriate to identify, measure, and monitor risks of the covered 
company that may affect the financial stability of the United States.
    (3) In conducting the analyses, the Board will coordinate with the 
appropriate primary financial regulatory agencies and the Federal 
Insurance Office, as appropriate.
    (b) Economic and financial scenarios related to the Board's 
analysis. The Board will conduct its analysis under this section using 
a minimum of three different scenarios, including a baseline scenario, 
adverse scenario, and severely adverse scenario. The Board will notify 
covered companies of the scenarios that the Board will apply to conduct 
the analysis for each stress test cycle by no later than November 15 of 
each year, except with respect to trading or any other components of 
the scenarios and any additional scenarios that the Board will apply to 
conduct the analysis, which will be communicated by no later than 
December 1.


Sec.  252.135  Data and information required to be submitted in support 
of the Board's analyses.

    (a) Regular submissions. Each covered company must submit to the 
Board such data, on a consolidated basis, that the Board determines is 
necessary in order for the Board to derive the relevant pro forma 
estimates of the covered company over the planning horizon under the 
scenarios described in section 252.134(b).
    (b) Additional submissions required by the Board. The Board may 
require a covered company to submit any other information on a 
consolidated basis that the Board deems necessary in order to:
    (1) Ensure that the Board has sufficient information to conduct its 
analysis under this subpart; and
    (2) Project a company's pre-provision net revenue, losses, 
provision for loan and lease losses, and net income; and, pro forma 
capital levels, regulatory capital ratios, tier 1 common ratio, and any 
other capital ratio specified by the Board under the scenarios 
described in Sec.  252.134(b).
    (c) Confidential treatment of information submitted. The 
confidentiality of information submitted to the Board under this 
subpart and related materials shall be determined in accordance with 
the Freedom of Information Act (5 U.S.C. 552(b)) and the Board's Rules 
Regarding Availability of Information (12 CFR part 261).


Sec.  252.136  Review of the Board's analysis; publication of summary 
results.

    (a) Review of results. Based on the results of the analysis 
conducted under this subpart, the Board will conduct an evaluation to 
determine whether the covered company has the capital, on a total 
consolidated basis, necessary to absorb losses and continue its 
operation by maintaining ready access to funding, meeting its 
obligations to creditors and other counterparties, and continuing to 
serve as a credit intermediary under baseline, adverse and severely 
adverse scenarios, and any additional scenarios.
    (b) Communication of results to covered companies. The Board will 
convey to a covered company a summary of the results of the Board's 
analyses of such covered company within a reasonable period of time, 
but no later than March 31.
    (c) Publication of results by the Board. By March 31 of each 
calendar year, the Board will disclose a summary of the results of the 
Board's analyses of a covered company.


Sec.  252.137  Use requirement.

    (a) In general. The board of directors and senior management of 
each covered company must consider the results of the analysis 
conducted by the Board under this subpart, as appropriate:
    (1) As part of the covered company's capital plan and capital 
planning process, including when making changes to the covered 
company's capital structure (including the level and composition of 
capital);
    (2) When assessing the covered company's exposures, concentrations, 
and risk positions; and
    (3) In the development or implementation of any plans of the 
covered company for recovery or resolution.
    (b) Resolution plan updates. Each covered company must update its 
resolution plan as the Board determines appropriate, based on the 
results of the Board's analyses of the covered company under this 
subpart.

0
3. Subpart G to part 252 is revised to read as follows:

Subpart G--Company-Run Stress Test Requirements for Covered 
Companies

Sec.
252.141 Authority and purpose.
252.142 Definitions.
252.143 Applicability.
252.144 Annual stress test.
252.145 Mid-cycle stress test.
252.146 Methodologies and practices.
252.147 Reports of stress test results.
252.148 Disclosure of stress test results.


Sec.  252.141  Authority and purpose.

    (a) Authority. 12 U.S.C. 321-338a, 1467a(g), 1818, 1831p-1, 
1844(b), 1844(c), 5361, 5365, 5366.
    (b) Purpose. This subpart implements section 165(i)(2) of the Dodd-
Frank Act (12 U.S.C. 5365(i)(2)), which requires a covered company to 
conduct annual and semi-annual stress tests. This subpart also 
establishes definitions of stress test and related terms, methodologies 
for conducting stress tests, and reporting and disclosure requirements.


Sec.  252.142  Definitions.

    For purposes of this subpart, the following definitions apply:
    (a) Advanced approaches means the risk-weighted assets calculation 
methodologies at 12 CFR part 225, appendix G, and 12 CFR part 217, 
subpart E, as applicable, and any successor regulation.
    (b) Adverse scenario means a set of conditions that affect the U.S. 
economy or the financial condition of a covered company that are more 
adverse than those associated with the baseline scenario and may 
include trading or other additional components.
    (c) Average total consolidated assets means the average of the 
total consolidated assets as reported by a bank holding company on its 
Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) 
for the four most recent consecutive quarters. If the bank holding 
company has not filed the FR Y-9C for each of the four most recent 
consecutive quarters, average total consolidated assets means the 
average of the company's total consolidated assets, as reported on the 
company's FR Y-9C, for the most recent quarter or consecutive quarters. 
Average total consolidated assets are measured on the as-of date of the 
most recent FR Y-9C used in the calculation of the average.
    (d) Bank holding company has the same meaning as in section 
225.2(c) of the Board's Regulation Y (12 CFR 225.2(c)).

[[Page 59789]]

    (e) Baseline scenario means a set of conditions that affect the 
U.S. economy or the financial condition of a covered company and that 
reflect the consensus views of the economic and financial outlook.
    (f) Capital action has the same meaning as in section 225.8(c)(2) 
of the Board's Regulation Y (12 CFR 225.8(c)(2)).
    (g) Covered company means:
    (1) A bank holding company (other than a foreign banking 
organization) with average total consolidated assets of $50 billion or 
more; and
    (2) A nonbank financial company supervised by the Board.
    (h) Depository institution has the same meaning as in section 3 of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).
    (i) Foreign banking organization has the same meaning as in section 
211.21(o) of the Board's Regulation K (12 CFR 211.21(o)).
    (j) Nonbank financial company supervised by the Board means a 
nonbank financial company that the Financial Stability Oversight 
Council has determined under section 113 of the Dodd-Frank Act (12 
U.S.C. 5323) shall be supervised by the Board and for which such 
determination is still in effect.
    (k) Planning horizon means the period of at least nine quarters, 
beginning on the first day of a stress test cycle (on October 1 or 
April 1, as appropriate) over which the relevant projections extend.
    (l) Pre-provision net revenue means the sum of net interest income 
and non-interest income less expenses before adjusting for loss 
provisions.
    (m) Provision for loan and lease losses means the provision for 
loan and lease losses as reported by the covered company on the FR Y-
9C.
    (n) Regulatory capital ratio means a capital ratio for which the 
Board established minimum requirements for the company by regulation or 
order, including, as applicable, the company's tier 1 and supplementary 
leverage ratios and common equity tier 1, tier 1, and total risk-based 
capital ratios as calculated under appendices A, D, E, and G to this 
part (12 CFR part 225) and 12 CFR part 217, as applicable, including 
the transition provisions at 12 CFR 217.1(f)(4) and 12 CFR 217.300, or 
any successor regulation.
    (o) Scenarios are those sets of conditions that affect the U.S. 
economy or the financial condition of a covered company that the Board, 
or with respect to the mid-cycle stress test required under section 
252.145 of this subpart, the covered company, annually determines are 
appropriate for use in the company-run stress tests, including, but not 
limited to, baseline, adverse, and severely adverse scenarios.
    (p) Severely adverse scenario means a set of conditions that affect 
the U.S. economy or the financial condition of a covered company and 
that overall are more severe than those associated with the adverse 
scenario and may include trading or other additional components.
    (q) Stress test means a process to assess the potential impact of 
scenarios on the consolidated earnings, losses, and capital of a 
covered company over the planning horizon, taking into account its 
current condition, risks, exposures, strategies, and activities.
    (r) Stress test cycle means the period between October 1 of a 
calendar year and September 30 of the following calendar year.
    (s) Subsidiary has the same meaning as in section 225.2(o) the 
Board's Regulation Y (12 CFR 225.2).
    (t) Tier 1 common ratio has the same meaning as in section 225.8 of 
the Board's Regulation Y (12 CFR 225.8).


Sec.  252.143  Applicability.

    (a) Compliance date for bank holding companies that are covered 
companies as of November 15, 2012--(1) In general. Except as provided 
in paragraph (a)(2) or (3) of this section, a bank holding company that 
is a covered company as of November 15, 2012, must comply with the 
requirements of this subpart beginning with the stress test cycle 
commencing on October 1, 2013, unless that time is extended by the 
Board in writing.
    (2) 2009 Supervisory Capital Assessment Program. A bank holding 
company that participated in the 2009 Supervisory Capital Assessment 
Program, or a successor to such a bank holding company, must comply 
with the requirements of this subpart beginning with the stress test 
cycle commencing on November 15, 2012, unless that time is extended by 
the Board in writing.
    (3) SR Letter 01-01. A U.S.-domiciled bank holding company that is 
a covered company as of November 15, 2012, and is a subsidiary of a 
foreign banking organization that is currently relying on Supervision 
and Regulation Letter SR 01-01 issued by the Board (as in effect on May 
19, 2010) must comply with the requirements of this subpart beginning 
with the stress test cycle commencing on October 1, 2015, unless that 
time is extended by the Board in writing.
    (b) Compliance date for institutions that become covered companies 
after November 15, 2012--(1) Bank holding companies. A bank holding 
company that becomes a covered company after November 15, 2012, must 
comply with the requirements of this subpart beginning with the stress 
test cycle that commences in the calendar year after the year in which 
the bank holding company becomes a covered company, unless that time is 
extended by the Board in writing.
    (2) Nonbank financial companies supervised by the Board. A company 
that becomes a nonbank financial company supervised by the Board must 
comply with the requirements of this subpart beginning with the stress 
test cycle that commences in the calendar year after the year in which 
company first becomes subject to the Board's minimum regulatory capital 
requirements, unless the Board accelerates or extends the compliance 
date.
    (c) Ongoing application. A bank holding company that is a covered 
company will remain subject to the requirements of this subpart unless 
and until its total consolidated assets fall below $50 billion for each 
of four consecutive quarters, as reported on the FR Y-9C. The 
calculation will be effective on the as-of date of the fourth 
consecutive FR Y-9C.
    (d) Advanced approaches. Notwithstanding any other requirement in 
this section, for a given stress test cycle, a covered company's 
estimates of its pro forma regulatory capital ratios and the estimate 
of its pro forma tier 1 common ratio over the planning horizon shall 
not include estimates using the advanced approaches if the company is 
notified on or after the first day of that stress test cycle (October 
1) that it is required to calculate its risk-based capital requirements 
using the advanced approaches.


Sec.  252.144  Annual stress test.

    (a) In general. A covered company must conduct an annual stress 
test by January 5 during each stress test cycle based on data as of 
September 30 of the preceding calendar year, unless the time or the as 
of date is extended by the Board in writing.
    (b) Scenarios provided by the Board--(1) In general. In conducting 
a stress test under this section, a covered company must use the 
scenarios provided by the Board. Except as provided in paragraphs 
(b)(2) and (3) of this section, the Board will provide a description of 
the scenarios to each covered company no later than November 15 of that 
calendar year.
    (2) Additional components. (i) The Board may require a covered 
company with significant trading activity, as determined by the Board 
and specified

[[Page 59790]]

in the Capital Assessments and Stress Testing report (FR Y-14), to 
include a trading and counterparty component in its adverse and 
severely adverse scenarios in the stress test required by this section. 
The data used in this component will be as of a date between October 1 
and December 1 of that calendar year selected by the Board, and the 
Board will communicate the as-of date and a description of the 
component to the company no later than December 1 of the calendar year.
    (ii) The Board may require a covered company to include one or more 
additional components in its adverse and severely adverse scenarios in 
the stress test required by this section based on the company's 
financial condition, size, complexity, risk profile, scope of 
operations, or activities, or risks to the U.S. economy.
    (3) Additional scenarios. The Board may require a covered company 
to use one or more additional scenarios in the stress test required by 
this section based on the company's financial condition, size, 
complexity, risk profile, scope of operations, or activities, or risks 
to the U.S. economy.
    (4) Notice and response. If the Board requires a covered company to 
include one or more additional components in its adverse and severely 
adverse scenarios under paragraph (b)(2)(ii) of this section or to use 
one or more additional scenarios under paragraph (b)(3) of this 
section, the Board will notify the company in writing no later than 
September 30. The notification will include a general description of 
the additional component(s) or additional scenario(s) and the basis for 
requiring the company to include the additional component(s) or 
additional scenario(s). Within 14 calendar days of receipt of a 
notification under this paragraph, the covered company may request in 
writing that the Board reconsider the requirement that the company 
include the additional component(s) or additional scenario(s), 
including an explanation as to why the reconsideration should be 
granted. The Board will respond in writing within 14 calendar days of 
receipt of the company's request. The Board will provide the covered 
company with a description of any additional component(s) or additional 
scenario(s) by December 1.


Sec.  252.145  Mid-cycle stress test.

    (a) Mid-cycle stress test requirement. In addition to the stress 
test required under section 252.144 of this subpart, a covered company 
must conduct a stress test by July 5 during each stress test cycle 
based on data as of March 31 of that calendar year, unless the time or 
the as-of date is extended by the Board in writing.
    (b) Scenarios related to mid-cycle stress tests--(1) In general. A 
covered company must develop and employ a minimum of three scenarios, 
including a baseline scenario, adverse scenario, and severely adverse 
scenario, that are appropriate for its own risk profile and operations, 
in conducting the stress test required by this section.
    (2) Additional components. The Board may require a covered company 
to include one or more additional components in its adverse and 
severely adverse scenarios in the stress test required by this section 
based on the company's financial condition, size, complexity, risk 
profile, scope of operations, or activities, or risks to the U.S. 
economy.
    (3) Additional scenarios. The Board may require a covered company 
to use one or more additional scenarios in the stress test required by 
this section based on the company's financial condition, size, 
complexity, risk profile, scope of operations, or activities, or risks 
to the U.S. economy.
    (4) Notice and response. If the Board requires a covered company to 
include one or more additional components in its adverse and severely 
adverse scenarios under paragraph (b)(2) of this section or one or more 
additional scenarios under paragraph (b)(3) of this section, the Board 
will notify the company in writing no later than March 31. The 
notification will include a general description of the additional 
component(s) or additional scenario(s) and the basis for requiring the 
company to include the additional component(s) or additional 
scenario(s). Within 14 calendar days of receipt of a notification under 
this paragraph, the covered company may request in writing that the 
Board reconsider the requirement that the company include the 
additional component(s) or additional scenario(s), including an 
explanation as to why the reconsideration should be granted. The Board 
will respond in writing within 14 calendar days of receipt of the 
company's request. The Board will provide the covered company with a 
description of any additional component(s) or additional scenario(s) by 
June 1.


Sec.  252.146  Methodologies and practices.

    (a) Potential impact on capital. In conducting a stress test under 
sections 252.144 and 252.145, for each quarter of the planning horizon, 
a covered company must estimate the following for each scenario 
required to be used:
    (1) Losses, pre-provision net revenue, provision for loan and lease 
losses, and net income; and
    (2) The potential impact on pro forma regulatory capital levels and 
pro forma capital ratios (including regulatory capital ratios, the tier 
1 common ratio, and any other capital ratios specified by the Board), 
incorporating the effects of any capital actions over the planning 
horizon and maintenance of an allowance for loan losses appropriate for 
credit exposures throughout the planning horizon.
    (b) Assumptions regarding capital actions. In conducting a stress 
test under Sec. Sec.  252.144 and 252.145, a covered company is 
required to make the following assumptions regarding its capital 
actions over the planning horizon--
    (1) For the first quarter of the planning horizon, the covered 
company must take into account its actual capital actions as of the end 
of that quarter; and
    (2) For each of the second through ninth quarters of the planning 
horizon, the covered company must include in the projections of 
capital:
    (i) Common stock dividends equal to the quarterly average dollar 
amount of common stock dividends that the company paid in the previous 
year (that is, the first quarter of the planning horizon and the 
preceding three calendar quarters);
    (ii) Payments on any other instrument that is eligible for 
inclusion in the numerator of a regulatory capital ratio equal to the 
stated dividend, interest, or principal due on such instrument during 
the quarter; and
    (iii) An assumption of no redemption or repurchase of any capital 
instrument that is eligible for inclusion in the numerator of a 
regulatory capital ratio.
    (c) Controls and oversight of stress testing processes--(1) In 
general. The senior management of a covered company must establish and 
maintain a system of controls, oversight, and documentation, including 
policies and procedures, that are designed to ensure that its stress 
testing processes are effective in meeting the requirements in this 
subpart. These policies and procedures must, at a minimum, describe the 
covered company's stress testing practices and methodologies, and 
processes for validating and updating the company's stress test 
practices and methodologies consistent with applicable laws, 
regulations, and supervisory guidance. Policies of covered companies 
must also describe processes for scenario development for the mid-cycle 
stress test required under Sec.  252.145.

[[Page 59791]]

    (2) Oversight of stress testing processes. The board of directors, 
or a committee thereof, of a covered company must approve and review 
the policies and procedures of the stress testing processes as 
frequently as economic conditions or the condition of the covered 
company may warrant, but no less than annually. The board of directors 
and senior management of the covered company must receive a summary of 
the results of any stress test conducted under this subpart.
    (3) Role of stress testing results. The board of directors and 
senior management of each covered company must consider the results of 
the analysis it conducts under this subpart, as appropriate:
    (i) As part of the covered company's capital plan and capital 
planning process, including when making changes to the covered 
company's capital structure (including the level and composition of 
capital);
    (ii) When assessing the covered company's exposures, 
concentrations, and risk positions; and
    (iii) In the development or implementation of any plans of the 
covered company for recovery or resolution.


Sec.  252.147  Reports of stress test results.

    (a) Reports to the Board of stress test results. (1) A covered 
company must report the results of the stress test required under Sec.  
252.144 to the Board by January 5 of each calendar year in the manner 
and form prescribed by the Board, unless that time is extended by the 
Board in writing.
    (2) A covered company must report the results of the stress test 
required under Sec.  252.145 to the Board by July 5 of each calendar 
year in the manner and form prescribed by the Board, unless that time 
is extended by the Board in writing.
    (b) Confidential treatment of information submitted. The 
confidentiality of information submitted to the Board under this 
subpart and related materials shall be determined in accordance with 
applicable exemptions under the Freedom of Information Act (5 U.S.C. 
552(b)) and the Board's Rules Regarding Availability of Information (12 
CFR part 261).


Sec.  252.148  Disclosure of stress test results.

    (a) Public disclosure of results--(1) In general. (i) A covered 
company must disclose a summary of the results of the stress test 
required under section 252.144 in the period beginning on March 15 and 
ending on March 31, unless that time is extended by the Board in 
writing.
    (ii) A covered company must disclose a summary of the results of 
the stress test required under Sec.  252.145 in the period beginning on 
September 15 and ending on September 30, unless that time is extended 
by the Board in writing.
    (2) Disclosure method. The summary required under this section may 
be disclosed on the Web site of a covered company, or in any other 
forum that is reasonably accessible to the public.
    (b) Summary of results. A covered company must disclose, at a 
minimum, the following information regarding the severely adverse 
scenario:
    (1) A description of the types of risks included in the stress 
test;
    (2) A general description of the methodologies used in the stress 
test, including those employed to estimate losses, revenues, provision 
for loan and lease losses, and changes in capital positions over the 
planning horizon;
    (3) Estimates of--
    (i) Pre-provision net revenue and other revenue;
    (ii) Provision for loan and lease losses, realized losses or gains 
on available-for-sale and held-to-maturity securities, trading and 
counterparty losses, and other losses or gains;
    (iii) Net income before taxes;
    (iv) Loan losses (dollar amount and as a percentage of average 
portfolio balance) in the aggregate and by subportfolio, including: 
domestic closed-end first-lien mortgages; domestic junior lien 
mortgages and home equity lines of credit; commercial and industrial 
loans; commercial real estate loans; credit card exposures; other 
consumer loans; and all other loans; and
    (v) Pro forma regulatory capital ratios and the tier 1 common ratio 
and any other capital ratios specified by the Board;
    (4) An explanation of the most significant causes for the changes 
in regulatory capital ratios and the tier 1 common ratio; and
    (5) With respect to a stress test conducted pursuant to section 
165(i)(2) of the Dodd-Frank Act by an insured depository institution 
that is a subsidiary of the covered company and that is required to 
disclose a summary of its stress tests results under applicable 
regulations, changes in regulatory capital ratios and any other capital 
ratios specified by the Board of the depository institution subsidiary 
over the planning horizon, including an explanation of the most 
significant causes for the changes in regulatory capital ratios.
    (c) Content of results. (1) The following disclosures required 
under paragraph (b) of this section must be on a cumulative basis over 
the planning horizon:
    (i) Pre-provision net revenue and other revenue;
    (ii) Provision for loan and lease losses, realized losses/gains on 
available-for-sale and held-to-maturity securities, trading and 
counterparty losses, and other losses or gains;
    (iii) Net income before taxes; and
    (iv) Loan losses in the aggregate and by subportfolio.
    (2) The disclosure of pro forma regulatory capital ratios, the tier 
1 common ratio, and any other capital ratios specified by the Board 
that is required under paragraph (b) of this section must include the 
beginning value, ending value, and minimum value of each ratio over the 
planning horizon.

    By order of the Board of Governors of the Federal Reserve 
System, September 24, 2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013-23618 Filed 9-27-13; 8:45 am]
BILLING CODE 6210-01-P