This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

7927 

Vol. 86, No. 21 

Wednesday, February 3, 2021 

DEPARTMENT OF HOMELAND 

SECURITY 

8 CFR Part 214 

RIN 1615–AC63 

DEPARTMENT OF LABOR 

Office of the Secretary of Labor 

20 CFR Part 655 

29 CFR Parts 18 and 503 

RIN 1290–AA43 

Discretionary Review by the Secretary 

of Labor 

AGENCY: U.S. Citizenship and 

Immigration Services, Department of 

Homeland Security and Office of the 

Secretary, Department of Labor. 

ACTION: Direct final rule; withdrawal. 

SUMMARY: Due to the receipt of a 

significant adverse comment, the 

Department of Homeland Security and 

the Department of Labor (Departments) 

are jointly withdrawing the January 4, 

2021, direct final rule (DFR) that would 

have extended DOL’s recently 

established system of discretionary 

Secretary of Labor review to H–2B 

temporary labor certification cases 

(H–2B cases) pending before or decided 

by the Department of Labor’s Board of 

Alien Labor Certification Appeals and 

made technical, conforming changes to 

regulations governing the timing and 

finality of those decisions and of 

decisions from the Department of 

Labor’s Administrative Review Board in 

H–2B cases. 

DATES: As of February 2, 2021, the direct 

final rule published at 86 FR 1 on 

January 4, 2021, is withdrawn. 

FOR FURTHER INFORMATION CONTACT: 

Todd Smyth, General Counsel, U.S. 

Department of Labor, Office of 

Administrative Law Judges, 800 K Street 

NW, Washington, DC 20001–8002; 

telephone (513) 684–3252. Individuals 

with hearing or speech impairments 

may access the telephone number above 

by TTY by calling the toll-free Federal 

Information Relay Service at (800) 877– 

8339. 

SUPPLEMENTARY INFORMATION: In the 

DFR, the Departments stated that if a 

significant adverse comment was 

submitted by January 19, 2021, the 

Departments would publish a timely 

withdrawal in the Federal Register 

informing the public that the DFR will 

not take effect. The Departments 

received a significant adverse comment 

prior to the close of the comment period 

and are therefore withdrawing the DFR. 

The Departments may address all 

comments, as appropriate, in a new 

final rule based upon the proposed rule 

also published in the Federal Register 

on January 4, 2021 (86 FR 29). 

List of Subjects 

20 CFR Part 655 

Administrative practice and 

procedure, Labor certification processes 

for temporary employment. 

29 CFR Part 18 

Administrative practice and 

procedure, Labor. 

29 CFR Part 503 

Administrative practice and 

procedure, Obligations; Enforcement, 

Immigration and Nationality Act, 

Temporary alien non-agricultural 

workers. 

■ Accordingly, the amendments to 20 

CFR part 655 and 29 CFR parts 18 and

503, published in the Federal Register

on January 4, 2021 (86 FR 1), which

were to take effect February 3, 2021, are

withdrawn as of February 2, 2021.

Milton Al Stewart, 

Acting Secretary of Labor. 

David P. Pekoske, 

Acting Secretary of Homeland Security. 

[FR Doc. 2021–02317 Filed 2–2–21; 8:45 am] 

BILLING CODE 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 217, 225, 238, and 252 

[Regulations Q, Y, LL, and YY; Docket No. 

R–1724] 

RIN 7100–AF95 

Capital Planning and Stress Testing 

Requirements for Large Bank Holding 

Companies, Intermediate Holding 

Companies and Savings and Loan 

Holding Companies 

AGENCY: Board of Governors of the 

Federal Reserve System (Board). 

ACTION: Final rule. 

SUMMARY: The Board is adopting a final 

rule (final rule) to tailor the 

requirements in the Board’s capital plan 

rule (capital plan rule) based on risk. 

Specifically, as indicated in the Board’s 

October 2019 rulemaking that updated 

the prudential framework for large bank 

holding companies and U.S. 

intermediate holding companies of 

foreign banking organizations (tailoring 

framework), the final rule modifies the 

capital planning, regulatory reporting, 

and stress capital buffer requirements 

for firms subject to ‘‘Category IV’’ 

standards under that framework. To be 

consistent with recent changes to the 

Board’s stress testing rules, the final rule 

makes other changes to the Board’s 

stress testing rules, Stress Testing Policy 

Statement, and regulatory reporting 

requirements, such as the assumptions 

relating to business plan changes and 

capital actions and the publication of 

company-run stress test results for 

savings and loan holding companies. 

The final rule also applies the capital 

planning and stress capital buffer 

requirements to covered saving and loan 

holding companies subject to Category 

II, Category III, and Category IV 

standards under the tailoring 

framework. 

DATES: The final rule is effective April 

5, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Constance Horsley, Deputy Associate 

Director, (202) 452–5239, Mark 

Handzlik, Manager (202) 475–6316, 

Sean Healey, Lead Financial Institution 

Policy Analyst, (202) 912–4611, Hillel 

Kipnis, Senior Financial Institution 

Policy Analyst II, (202) 452–2924, John 

Simone, Senior Financial Institution 

Policy Analyst II, (202) 245–4256, 

Brendan Rowan, Senior Financial 


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7928 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 

1The common equity capital ratios of firms 

subject to Comprehensive Capital Analysis and 

Review (CCAR) have more than doubled since 2009. 

Combined, these firms hold more than $1 trillion 

of common equity tier 1 capital and are 

substantially more resilient than they were ten 

years ago. 

2See 12 CFR 225.8; see also Capital Plans, 76 FR 

74631 (Dec. 1, 2011). Originally, as a part of the 

capital plan rule, the Federal Reserve could object 

to a firm’s capital plan based on a qualitative 

assessment. A subsequent rulemaking changed this 

requirement such that after CCAR 2020 no firm will 

be subject to a potential qualitative objection if the 

firm successfully passed several qualitative 

evaluations. Amendments to the Capital Plan Rule, 

84 FR 8953 (March 13, 2019). All firms subject to 

the capital plan rule have successfully passed the 

required number of qualitative evaluations such 

that no firms are subject to the qualitative objection 

going forward. As a result, the final rule revises the 

capital plan rule to remove references to the 

qualitative objection. 

3See 12 CFR part 217. Large banking 

organizations also became subject to a 

countercyclical capital buffer requirement, and the 

largest and most systemically important firms— 

global systemically important bank holding 

companies, or GSIBs—became subject to an 

additional capital buffer based on a measure of their 

systemic risk, the GSIB surcharge. See Regulatory 

Capital Rules: Implementation of Risk-Based 

Capital Surcharges for Global Systemically 

Important Bank Holding Companies, 80 FR 49082 

(Aug. 14, 2015). 

4See Regulations Q, Y, and YY: Regulatory 

Capital, Capital Plan, and Stress Test Rules, 85 FR 

15576 (March 18, 2020). 

5See Prudential Standards for Large Bank 

Holding Companies, Savings and Loan Holding 

Companies, and Foreign Banking Organizations, 84 

FR 59032 (Nov. 1, 2019). 

6The final rule increased the threshold for 

general application of these standards from $50 

billion to $100 billion in total consolidated assets. 

Institution Policy Analyst I, (202) 475– 

6685, and Palmer Osteen, Financial 

Institution Policy Analyst II, (202) 785– 

6025, Division of Supervision and 

Regulation; Benjamin McDonough, 

Associate General Counsel, (202) 452– 

2036, Julie Anthony, Senior Counsel, 

(202) 475–6682, Asad Kudiya, Senior 

Counsel, (202) 475–6358, Jonah Kind, 

Counsel, (202) 452–2045, or Jasmin 

Keskinen, Attorney, (202) 475–6650, 

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: 

Table of Contents 

I. Changes to the Capital Plan Rule 

A. Introduction 

i. Background on Capital Planning, Stress 

Testing and Stress Capital Buffer 

Requirements 

ii. Background on Tailoring Framework 

iii. Overview of Proposed Rule and 

Summary of Comments 

iv. Overview of Final Rule 

B. Changes to Capital Planning 

Requirements for Firms Subject to 

Category IV Standards 

C. Calculation and Timing of the Stress 

Capital Buffer Requirement for Firms 

Subject to Category IV Standards 

D. Changes to Stress Test Rules for Firms 

With Total Consolidated Assets of at 

Least $100 Billion 

i. Business Plan Change Assumption 

ii. Changes to Reporting Requirements 

Related to Stress Test Rule Changes 

E. Covered Savings and Loan Holding 

Companies 

i. Application of Capital Plan Rule 

ii. Stress Test Rule Changes 

F. Definition of Common Stock Dividend 

in Capital Plan Rule 

G. Impact Analysis 

II. Board Guidance on Capital Planning 

III. Administrative Law Matters 

A. Paperwork Reduction Act 

B. Regulatory Flexibility Act 

C. Solicitation of Comments of Use of Plain 

Language 

I. Changes to the Capital Plan Rule 

A. Introduction 

i. Background on Capital Planning, 

Stress Testing and Stress Capital Buffer 

Requirements 

Stress testing is a core element of the 

Board’s regulatory framework and 

supervisory program for large firms. 

Stress testing enables the Board to 

assess whether large firms have 

sufficient capital to absorb potential 

losses and continue lending under 

severely adverse conditions. Experience 

has demonstrated that rigorous stress 

testing—together with stronger capital 

requirements implemented in the 

Board’s capital rule—have significantly 

improved the resilience of the U.S. 

banking system.1

The Board implemented its capital 

plan rule to require large firms to 

develop and maintain capital plans 

supported by robust processes for 

assessing their capital adequacy, in 

2011.2 The Board made changes to its 

regulatory capital rule—which 

establishes minimum regulatory capital 

requirements—in 2013. These changes 

address weaknesses observed during the 

2008–2009 financial crisis, including 

the establishment of a minimum 

common equity tier 1 (CET1) capital 

requirement and a fixed capital 

conservation buffer equal to 2.5 percent 

of risk-weighted assets.3

In March 2020, the Board adopted a 

final rule (stress capital buffer rule) to 

integrate its capital plan rule and 

regulatory capital rule through the 

establishment of a stress capital buffer 

requirement, creating a single, risksensitive framework for large banking 

organizations.4 To achieve individually 

tailored and risk-sensitive capital 

requirements for banking organizations 

subject to the capital plan rule, the 

stress capital buffer rule establishes the 

size of a firm’s stress capital buffer 

requirement based in part on a 

supervisory stress test conducted by the 

Federal Reserve. 

The stress capital buffer rule included 

several changes to the assumptions 

embedded in the supervisory stress test, 

notably removing the assumption that 

firms make all planned common 

distributions and excluding material 

business plan changes from the stress 

capital buffer requirement calculation. 

Previously, under the Comprehensive 

Capital Analysis and Review (CCAR), 

the Board assumed that a firm would 

continue to make all planned dividends 

and share repurchases under stress, and 

therefore required firms to pre-fund 

nine quarters of planned dividends and 

share repurchases. Under the stress 

capital buffer rule, the Board no longer 

assumes that a firm would continue to 

make all planned dividends and share 

repurchases under stress. The stress 

capital buffer requirement includes 

four-quarters of planned dividends in a 

firm’s capital buffer requirements; 

therefore, firms are subject to a prefunding requirement of four quarters of 

planned dividends. This approach 

recognizes the capital rule’s automatic 

limitations on capital distributions 

while continuing to promote forwardlooking capital planning and mitigate 

pro-cyclicality. 

Prior to the implementation of the 

stress capital buffer rule, the impact of 

expected material changes to a firm’s 

business plan were incorporated into a 

firm’s CCAR results. In order to simplify 

the stress test framework and to reduce 

burden, material business plan changes 

are not included in the stress capital 

buffer requirement. Instead, material 

changes to a firm’s business plan 

resulting from a merger or acquisition 

are incorporated into a firm’s capital 

and risk-weighted assets upon 

consummation of the transaction. 

ii. Background on Tailoring Framework 

In October 2019, the Board issued a 

final rule that established a revised 

framework for applying prudential 

standards to large firms to align 

prudential standards more closely to a 

large firm’s risk profile (tailoring rule).5

The tailoring rule established four 

categories of prudential standards and 

applies them based on indicators 

designed to measure the risk profile of 

a firm.6 Table I outlines the scoping 


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7Both changes related to stress testing rules for 

firms subject to Category IV standards—(1) to 

remove the requirement to conduct and to publicly 

disclose the results of the company-run stress tests; 

and (2) to change the frequency of the supervisory 

stress test to biennial—were consistent with 

amendments to section 165 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act (DoddFrank Act), Public Law 111–203, 124 Stat. 1376 

(2010), made by the Economic Growth, Regulatory 

Relief and Consumer Protection Act (EGRRCPA). 

See Public Law 115–174, 132 Stat. 1296 (2018). 

8See 85 FR 15576, 15593, fn 57. 

9 85 FR 63222 (Oct. 7, 2020). 

10The proposal would have allowed the Board, 

under certain circumstances, based on the 

macroeconomic outlook or based on the firm’s risk 

profile, financial condition or corporate structure, 

to require a firm subject to Category IV standards 

to submit a capital plan under scenarios provided 

by the Board. 

11See 12 CFR part 252, subparts E and F. 

12 In particular, the Board received comments 

related to allowed distributions during a capital 

plan resubmission period, the definition of 

‘‘material’’ in the capital plan rule, collecting 

additional data related to purchase accounting, 

reintroducing the materiality threshold for a 

regulatory reporting requirement, including climate 

risks in the stress test, the criteria for application 

of the global market shock and large counterparty 

default components, the calculation of capital and 

loss absorbing capacity requirements for 

intermediate holding companies, the requirements 

for including capital actions in company-run stress 

tests, the inclusion of leverage ratios in the stress 

test, and the volatility of the stress capital buffer 

requirement. The Board also received several 

technical comments on the supervisory stress test 

models, including related to its revenue model, 

Continued 

criteria for categories of prudential 

standards adopted in the final tailoring 

rule. 

standards adopted in the final tailoring 

rule. 

TABLE I—SCOPING CRITERIA FOR CATEGORIES OF PRUDENTIAL STANDARDS

Category U.S. banking organizations 

Foreign 

banking 

organizations 

I ....................... U.S. GSIBs and their depository institution subsidiaries ................................................................................ N/A. 

II ...................... $700 billion or more in total assets; or $75 billion or more in cross-jurisdictional activity; and do not meet the criteria for Category I. 

III ..................... $250 billion or more in total assets; or $75 billion or more in weighted short-term wholesale funding, nonbank assets, or off-balance sheet exposure; and do not meet the criteria for Category I or II. 

IV .................... $100 billion or more in total assets; and do not meet the criteria for Category I–III. 

The tailoring rule made two changes 

to the stress testing rules for firms 

subject to Category IV standards. First, 

the tailoring rule removed the 

requirement for firms subject to 

Category IV standards to conduct and 

publicly disclose the results of 

company-run stress tests as defined in 

the Board’s stress testing rules. Second, 

the tailoring rule changed the frequency 

of the supervisory stress test for firms 

subject to Category IV standards from 

annual to biennial.7 In the tailoring rule, 

the Board also foreshadowed that it 

intended to provide greater flexibility to 

firms subject to Category IV standards to 

develop their annual capital plans and 

consider additional regulatory reporting 

burden relief in a separate proposal.8

As a part of the tailoring rule, covered 

savings and loan holding companies 

were made subject to the Board’s 

supervisory stress test and company-run 

stress test requirements in the same 

manner as comparable bank holding 

companies. In the tailoring rule, the 

Board indicated that it would apply 

capital planning requirements to savings 

and loan holding companies as part of 

a separate notice. 

iii. Overview of Proposed Rule and 

Summary of Comments 

On October 7, 2020, the Board issued 

a proposed rule (proposed rule or 

proposal) that would have modified the 

Board’s capital planning and stress 

capital buffer requirements to be more 

consistent with the tailoring 

framework.9 Specifically, for firms 

subject to Category IV standards, the 

proposal would have generally removed 

the requirement under the capital plan 

rule to calculate forward-looking 

projections of capital under scenarios 

provided by the Board. In addition, the 

proposal would have reduced the 

frequency with which the Federal 

Reserve would calculate the decline in 

the CET1 capital ratios for firms subject 

to Category IV standards for purposes of 

the stress capital buffer requirement, by 

revising it from an annual to a biennial 

calculation. The proposal also would 

have given these firms the ability to 

elect to participate in the supervisory 

stress test—and receive an updated 

stress capital buffer requirement—in a 

year in which they would not generally 

be subject to the supervisory stress 

test.10

The proposal included changes to the 

Board’s supervisory stress test and the 

company-run stress test rules.11 In 

particular, the proposal would have 

clarified the assumptions related to 

business plan changes, introduced 

revisions to the capital action 

assumptions, and required certain 

savings and loan holding companies to 

publicly disclose their stress tests 

results in a parallel manner to bank 

holding companies. 

The proposal also solicited comment 

on several topics, including the Federal 

Reserve’s guidance on capital planning, 

a definition of ‘‘common stock 

dividend’’ for purposes of the capital 

plan rule, and the application of capital 

planning and stress capital buffer 

requirements to savings and loan 

holding companies. 

The Board received thirteen comment 

letters from banking organizations, 

public interest groups, trade 

associations, and individuals. While 

many commenters were supportive of 

the proposal, some commenters 

opposed or requested additional 

clarification on parts of the proposed 

rule, including the changes related to 

capital planning requirements, the 

calculation and timing of the stress 

capital buffer requirement, and 

regulatory reporting changes for firms 

subject to Category IV requirements. In 

addition, commenters provided input 

on the Board’s capital planning 

guidance, a definition of a common 

stock dividend for purposes of the 

capital plan rule, and the application of 

capital planning and stress capital 

buffer requirements to savings and loan 

holding companies. The Board’s 

responses to the comments are provided 

in the discussion of the final rule. The 

Board also received several comments 

on issues not related to the proposal, 

which are not addressed below as they 

are outside the scope of this 

rulemaking.12


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7930 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 

global market shock losses, and losses related to 

large counterparty defaults. 

13The proposal also would have modified the 

terms ‘‘BHC baseline scenario’’ and ‘‘BHC stress 

scenario’’ in the capital plan rule to ‘‘Firm baseline 

scenario’’ and ‘‘Firm stress scenario,’’ respectively. 

To clarify that these are scenarios generated 

internally by firms, the final rule modifies the terms 

‘‘BHC baseline scenario’’ and ‘‘BHC stress scenario’’ 

to ‘‘Internal baseline scenario’’ and ‘‘Internal stress 

scenario,’’ respectively. These terms will be 

changed on the FR Y–14 reports beginning with the 

December 31, 2020, as of date. 

14Firms subject to Category IV standards will 

continue to be required to complete the FR Y–14A, 

Schedule C—Regulatory Capital Instruments, 

Schedule E—Operational Risk, and the Collection 

of Supplemental CECL Information. 15The line items would be the projections of 

Common Equity Tier 1 capital ratio, Tier 1 capital 

ratio, Total capital ratio, and net income under the 

Internal baseline scenario. 16FR Y–14A, Schedule C, is required for all firms 

subject to the capital plan rule on an annual basis. 

17The analysis should cover an appropriate 

period (usually a period of at least two years) to 

capture the relevant risks to a firm. A firm should 

estimate losses, revenues, expenses, and capital 

using sound methods that relate macroeconomic 

and other risk drivers to its estimates. 

iv. Overview of Final Rule 

Consistent with the proposal, the final 

rule revises the capital planning 

requirements for firms subject to 

Category IV standards to better align 

such requirements with the risk profiles 

of these firms. Specifically, the final 

rule removes the requirement for firms 

subject to Category IV standards to 

provide projections in a firm’s capital 

plan under the supervisory scenarios 

and the requirement to submit FR Y– 

14A schedules associated with 

company-run stress test results. The 

final rule also replaces the use of ‘‘large 

and noncomplex bank holding 

company’’ with the definition of a firm 

subject to Category IV standards. 

The final rule requires the stress test 

portion of the stress capital buffer 

requirement of a firm subject to 

Category IV standards to be updated in 

a manner consistent with the frequency 

of the supervisory stress test. The stress 

test portion of such a firm’s stress 

capital buffer requirement will not be 

updated in a year in which it does not 

participate in the supervisory stress test. 

The final rule allows such a firm to elect 

to opt-in to a stress test in a year in 

which the firm would not generally be 

subject to the supervisory stress test and 

to receive an updated stress capital 

buffer requirement in that year. 

The final rule adopts the proposed 

changes to the Board’s supervisory 

stress test and the company-run stress 

test rules, which clarify the assumptions 

firms and the Federal Reserve should 

make regarding the effects of material 

business plan changes in their stress test 

results and require certain savings and 

loan holding companies to publicly 

disclose their stress tests results. 

The final rule also applies capital 

planning and stress capital buffer 

requirements to covered saving and loan 

holding companies subject to Category 

II, Category III, or Category IV standards 

under the tailoring framework. 

B. Changes to Capital Planning 

Requirements for Firms Subject to 

Category IV Standards 

Consistent with section 401(e) of 

EGRRCPA, the tailoring rule adjusted 

the frequency of supervisory stress 

testing for firms subject to Category IV 

standards to every other year and 

eliminated the requirement to conduct 

and publicly disclose the results of a 

company-run stress test under the 

scenarios provided by the Board. These 

adjustments reflected the lower risk 

profile of a firm subject to Category IV 

standards relative to firms subject to 

Category I, II, or III standards. The final 

rule tailors the requirements in the 

capital plan rule that currently apply to 

Category IV firms, as discussed below. 

The proposal would have updated the 

terminology in the capital plan rule to 

conform to the terminology used in the 

tailoring rule by removing the term 

‘‘large and noncomplex bank holding 

company’’ and replacing it with the 

definition of a firm subject to Category 

IV standards. No comments were 

received on this change and the final 

rule adopts it as proposed. Given the 

effective date of this final rule, the 

definition of ‘‘large and noncomplex 

bank holding company’’ will be changed 

on the FR Y–14 reports beginning with 

the December 31, 2020, as of date.13

Under the proposal, firms subject to 

Category IV standards generally would 

not have been required to calculate 

estimates of projected revenues, losses, 

reserves, or pro forma capital levels 

(effectively a form of stress testing) 

using scenarios provided by the Board. 

However, under certain circumstances, 

based on the macroeconomic outlook or 

based on the firm’s risk profile, financial 

condition, or corporate structure, the 

proposal would have allowed the Board 

to require a firm subject to Category IV 

standards to submit a capital plan under 

scenarios provided by the Board. No 

comments were received on the removal 

of the general requirement for firms 

subject to Category IV standards to 

calculate stress test results under 

scenarios provided by the Board, or on 

the stipulation that the Board may 

require firms to make such calculations 

in particular circumstances. The final 

rule adopts these changes as proposed. 

The proposal would have updated 

regulatory reporting requirements to 

reflect the tailoring rule’s elimination of 

the company-run stress test requirement 

for a firm subject to Category IV 

standards. Specifically, under the 

proposal such firms would no longer 

have been required to submit to the 

Federal Reserve forward-looking 

projections in the granular form 

prescribed by the FR Y–14A, Schedule 

A—Summary, Schedule B—Scenario, 

Schedule F—Business Plan Changes, 

and Appendix A—Supporting 

Documentation. 

A commenter on the proposal noted 

that the Federal Reserve did not 

articulate the public benefits of 

removing the reporting requirements for 

firms subject to Category IV standards. 

Removing these reporting requirements 

is necessary to effectuate the 

elimination of the company-run stress 

test requirement for these firms adopted 

in the tailoring rule. As discussed in the 

tailoring rule, eliminating the companyrun stress test requirement for firms 

subject to Category IV standards is 

consistent with the statutory provisions 

and appropriate for these firms’ risk 

profile. These reporting schedules are 

not publicly available, so the 

adjustments to the reporting 

requirements do not affect the 

information in the public domain. This 

revision comes into effect beginning 

with the 2021 capital planning cycle.14

The proposal would have added four 

line items to FR Y–14A, Schedule C— 

Regulatory Capital Instruments, to 

provide the information needed to 

determine whether planned capital 

distributions included in a firm’s capital 

plan are consistent with any effective 

capital distribution limitations that 

would apply under the firm’s 

projections in the Internal baseline 

scenario, as required by the capital plan 

rule.15 No comments were received on 

this aspect of the proposal. To support 

compliance with the capital plan rule, 

these line items have been added to FR 

Y–14A, Schedule C, and are effective for 

the April 5, 2021, submission with a 

December 31, 2020, as of date.16 This 

will ensure that the Board can confirm 

compliance with the capital plan rule 

during the 2021 capital planning cycle. 

Under the final rule, firms subject to 

Category IV standards will continue to 

be required to provide a forward-looking 

analysis of income and capital levels 

under expected and stressful conditions 

in their annual capital plans. These 

projections are required to be tailored 

to, and sufficiently capture, the firm’s 

exposures, activities, and idiosyncratic 

risks in their capital plans.17 This 

includes projections under a scenario 


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18For example, bank holding companies with less 

than $50 billion in total consolidated assets are 

subject to guidance that clarifies such firms are 

expected to hold capital commensurate with their 

overall risk profile. See SR Letter 09–4, Applying 

Supervisory Guidance and Regulations on the 

Payment of Dividends, Stock Redemptions, and 

Stock Repurchases at Bank Holding Companies 

(Feb. 24, 2009, revised July 24, 2020). Holding 

companies with less than $100 billion in total 

consolidated assets are subject to an overall 

evaluation and rating of managerial and financial 

condition and an assessment of future potential risk 

to subsidiary depository institution(s) as part of the 

RFI or Modified RFI rating. See SR Letter 19–4/CA 

Letter 19–3, Supervisory Rating System for Holding 

Companies with Total Consolidated Assets Less 

Than $100 billion (Feb. 26, 2019) and SR Letter 13– 

21, Inspection Frequency and Scope Requirements 

for Bank Holding Companies and Savings and Loan 

Holding Companies with Total Consolidated Assets 

of $10 Billion or Less (Dec. 17, 2019, revised Mar. 

6, 2019). Bank holding companies with total 

consolidated assets of $100 billion or greater and 

certain savings and loan holding companies are 

subject to a supervisory evaluation of whether a 

covered firm possesses sufficient financial and 

operational strength and resilience to maintain safeand-sound operations through a range of 

conditions, including stressful ones. See SR Letter 

19–3, Large Financial Institution (LFI) Rating 

System (Feb. 26, 2019). 

19See Economic Growth, Regulatory Relief, and 

Consumer Protection Act, S. 2155, 115th Congress 

(2018). 20See Prudential Standards for Large Bank 

Holding Companies, Savings and Loan Holding 

Companies, and Foreign Banking Organizations, 84 

FR 59032 (Nov. 1, 2019). 

21The final rule also clarifies that a firm will not 

receive notice of its stress capital buffer 

requirement until the first year the Board conducts 

a supervisory stress test of the firm. 

designed by the firm that stresses the 

specific vulnerabilities of the firm’s risk 

profile and operations. This scenario 

should incorporate stressful conditions 

and events that could adversely affect 

the firm’s capital adequacy. 

While the final rule does not require 

firms subject to Category IV standards to 

include certain elements in their capital 

plans, all banking organizations, 

regardless of size and complexity, are 

expected to have the capacity to analyze 

the potential impact of adverse 

outcomes on their financial condition, 

including on capital.18 Therefore, riskmanagement practices should be 

tailored to the risk and complexity of 

the individual firm and should include 

practices to identify and assess its 

sensitivity to unexpected adverse 

outcomes before they occur. The Federal 

Reserve will continue to conduct an 

annual assessment of the capital plan of 

a firm subject to Category IV standards 

as part of its ongoing supervisory 

process, and the results of this 

assessment will continue to be an input 

into the firm’s capital planning and 

positions component of the Large 

Financial Institution Rating System. 

C. Calculation and Timing of the Stress 

Capital Buffer Requirement for Firms 

Subject to Category IV Standards 

Firms subject to Category IV standards 

are currently subject to supervisory 

stress testing on a two-year cycle. To 

align with the stress testing cycle for 

firms subject to Category IV standards, 

the proposal would have required the 

portion of the stress capital buffer 

requirement that is calculated as the 

decline in a firm’s CET1 capital ratio to 

be calculated every other year. During a 

year in which a firm subject to Category 

IV standards does not undergo a 

supervisory stress test, the firm would 

have received an updated stress capital 

buffer requirement that reflects the 

firm’s updated planned common stock 

dividends. 

A commenter objected to the 

proposed frequency of adjustments for 

the calculation of the decline in CET1 

capital ratios for purposes of stress 

capital buffer requirement for firms 

subject to Category IV standards. This 

commenter argued that a biennial 

frequency would adversely affect 

comparability across firms subject to the 

stress capital buffer requirement and 

cause their stress capital buffer 

requirements to rely on outdated 

information. As stated in the proposal, 

these adjustments align with the 

requirement under EGRRCPA to apply 

supervisory stress testing on a 

‘‘periodic’’ basis to firms with $100 

billion to $250 billion in assets, and the 

revisions to the supervisory stress test 

under the tailoring rule that changed the 

stress testing cycle for firms subject to 

Category IV standards from annual to 

biennial.19 20 Therefore, consistent with 

the proposal, the final rule requires the 

portion of the stress capital buffer 

requirement that is calculated as the 

decline in the CET1 capital ratio for 

firms subject to Category IV standards to 

be calculated every other year.21

The proposal would have allowed a 

firm subject to Category IV standards to 

elect to participate in the supervisory 

stress test in a year in which the firm 

would not normally be subject to the 

supervisory stress test. A firm that 

makes such an election would be a full 

participant in that year’s supervisory 

stress test, including being subject to the 

disclosure requirements related to the 

firm’s supervisory stress test results, and 

would receive an updated stress capital 

buffer requirement. 

Commenters generally supported the 

opt-in election set forth in the proposal 

and stated that the flexibility provided 

under this approach is appropriate for 

the risk profile of firms subject to 

Category IV standards. By contrast, one 

commenter argued that the opt-in 

election could undermine the credibility 

of the stress testing framework and 

cause concern regarding banking 

organizations that choose not to 

participate (that is, firms that choose not 

to participate may be perceived as being 

in weaker condition). 

The final rule allows firms subject to 

Category IV standards to request an 

updated stress capital buffer 

requirement in a year in which it would 

not generally be subject to the 

supervisory stress test. A firm’s decision 

to request such an update could stem 

from various factors, such as recent 

significant changes to the firm’s risk 

profile or corporate structure. The 

approach in the final rule reduces 

burden as a general matter while also 

providing flexibility for firm-specific 

requests. 

The proposal would have required a 

firm subject to Category IV standards to 

provide written notice of its election to 

the Board and appropriate Federal 

Reserve Bank by December 31 of the 

year preceding the year in which it 

seeks to opt in to the supervisory stress 

test. For purposes of the 2021 

supervisory stress test, the proposal 

included transitional procedures such 

that a firm subject to Category IV 

standards would have had until 

February 15, 2021, to provide written 

notice of its opt-in election to the Board 

and appropriate Federal Reserve Bank. 

A number of commenters argued that 

the proposal’s December 31 cut-off date 

for the opt-in notification is too early 

and requested that the final rule provide 

a mid-March deadline for a firm subject 

to Category IV standards to notify the 

Board and the appropriate Federal 

Reserve Bank in writing of its opt-in 

election for that year’s supervisory 

stress test. Additionally, these 

commenters argued that the February 15 

deadline is too early for the 2021 stress 

test cycle and requested more time to 

make their opt-in election. 

In response to these comments, the 

final rule requires firms subject to 

Category IV standards to provide prior 

written notice of their opt-in election to 

the Board and the appropriate Federal 

Reserve Bank by January 15 of any year 

in which they are not required to 

participate in the supervisory stress test, 

rather than the earlier December 31 

deadline. The January 15 date will 

provide these firms with more time to 

better understand their year-end 

financial results. The Board is also 

selecting this date because it generally 

precedes the announcement of stress 

test scenarios. Under the final rule, for 

purposes of the 2021 stress testing cycle, 

firms subject to Category IV standards 

have until April 5, 2021, to provide 

prior written notice of their opt-in 


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7932 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 

22 In order to provide notice to the Federal 

Reserve, firms should send a letter to the 

appropriate Federal Reserve Bank and to the Stress 

Testing Communication mailbox 

(info.stresstesting@frb.gov). 

23These sub-schedules include FR Y–14A, 

Schedule A.1.a—Income Statement, Schedule 

A.1.b—Balance Sheet, Schedule A.1.c.1— 

Standardized RWA, Schedule A.1.d—Capital, 

Schedule A.2.a—Retail Balance and Loss 

Projections, Schedule A.3—AFS/HTM Securities, 

Schedule A.4—Trading, Schedule A.5— 

Counterparty Credit Risk, Schedule A.6— 

Operational Risk, and Schedule A.7—Pre-Provision 

Net Revenue. 

24On FR Y–14A, Schedule A, the ‘‘DFAST’’ subschedule would not include the effects of material 

business plan changes and the ‘‘CCAR’’ subschedule would include these effects. On FR Y– 

14A, Schedule C, the ‘‘SCB’’ sub-schedule would 

not include the effects of material business plan 

changes and the ‘‘CCAR’’ sub-schedule would 

include these effects. 

election to the Board and the 

appropriate Federal Reserve Bank.22

Commenters requested clarity on 

whether there would be required 

disclosure of the stress capital buffer 

requirement for a firm subject to 

Category IV standards that did not 

participate in the supervisory stress test. 

One of these commenters supported 

mandatory disclosure of such a firm’s 

stress capital buffer requirement, 

regardless of opt-in or mandatory 

participation in the supervisory stress 

test for any given year. 

For all firms subject to the capital 

plan rule, the stress capital buffer 

requirement will be updated and 

publicly disclosed on an annual basis. 

During a year in which a firm subject to 

Category IV standards is not generally 

subject to the supervisory stress test, 

this firm will receive an updated stress 

capital buffer requirement that reflects 

the firm’s updated planned common 

stock dividends. 

As discussed in the proposal and 

allowed under the current capital plan 

rule, the Board retains the ability to 

require a firm to resubmit its capital 

plan if, among other reasons, the Board 

determines that there has been or will 

likely be a material change in the firm’s 

risk profile, financial condition, or 

corporate structure, or if changes to 

financial market conditions or the 

macroeconomic outlook require the use 

of updated scenarios. If a firm resubmits 

its capital plan, the Board may 

recalculate its stress capital buffer 

requirement and may use a new 

severely adverse scenario. These 

requirements help ensure that a firm’s 

stress capital buffer requirement 

remains commensurate with its risk 

profile. 

D. Changes to Stress Test Rules for 

Firms With Total Consolidated Assets of 

at Least $100 Billion 

i. Business Plan Change Assumption 

For purposes of the supervisory stress 

test, the Board does not incorporate the 

impact of expected changes to a firm’s 

business plan that are likely to have a 

material impact on the firm’s capital 

adequacy and funding profile (material 

business plan changes) in the balance 

sheet, risk-weighted asset, and capital 

projections. In order to ensure 

alignment in the assumptions in the 

supervisory and company-run stress 

tests, the proposal would have clarified 

that the Board and firms would exclude 

the impacts of unconsummated material 

business plan changes in the 

supervisory and company-run stress 

tests conducted pursuant to the DoddFrank Act. As this assumption would be 

reflected in the stress test rules, the 

proposal would have removed the 

corresponding section from the Stress 

Testing Policy Statement. No comments 

were received on these aspects of the 

proposal, and the final rule adopts them 

as proposed. 

Under the final rule, each firm will 

continue to be required to include in its 

capital plan a discussion of any 

expected changes to the firm’s business 

plan that are likely to have a material 

impact on the firm’s capital adequacy or 

liquidity. Each firm will also continue 

to be required to incorporate impacts of 

material business plan changes in 

projections of income and capital levels 

under all scenarios required for 

purposes of capital planning. This 

requirement helps to ensure that a firm 

appropriately understands the impact of 

changes to its business on the firm’s 

forward-looking capital position. If a 

material business plan change resulted 

in or would result in a material change 

in a firm’s risk profile, the firm would 

still be required to resubmit its capital 

plan. 

ii. Changes to Reporting Requirements 

Related to Stress Test Rule Changes 

The proposal would have updated the 

FR Y–14 reporting requirements for 

firms with total consolidated assets of at 

least $100 billion to conform with 

changes made to the stress test rules. 

Consistent with the proposal and as 

described above, the final rule no longer 

requires firms subject to Category IV 

standards to submit FR Y–14A 

schedules associated with company-run 

stress test results. These schedules 

include FR Y–14A, Schedule A, 

Schedule B, Schedule F, and Appendix 

A. 

In order to reflect the exclusion of 

material business plan changes in 

company-run stress test projections 

while also ensuring firms incorporate 

impacts of material business plan 

changes in projections of income and 

capital levels required for purposes of 

capital planning, the proposal would 

create two sub-schedules for all items 

on FR Y–14A, Schedule A and Schedule 

C: One where a firm would not 

incorporate the effects of material 

business plan changes and one where a 

firm would incorporate the effects of 

business plan changes, consistent with 

prior FR Y–14A reporting 

requirements.23 24 Firms subject to 

Category I, II, or III standards would be 

required to submit the two subschedules for both FR Y–14A, Schedule 

A and Schedule C, and firms subject to 

Category IV standards would be 

required to submit the two subschedules for only FR Y–14A, Schedule 

C. 

Firms would report projections on the 

‘‘DFAST’’ sub-schedule under the 

scenarios provided by the Federal 

Reserve, and firms would report 

projections on the ‘‘CCAR’’ subschedule under expected conditions and 

under a range of scenarios, including 

the supervisory severely adverse 

scenario provided by the Federal 

Reserve and at least one baseline 

scenario and one stress scenario 

generated by the firms. Given the 

changes made to FR Y–14A, Schedule 

A, firms subject to Category I, II, or III 

standards would no longer be required 

to submit the supervisory baseline 

scenario for FR Y–14A, Schedule F— 

Business Plan Changes. As noted in 

sections of the proposal and this final 

rule on the Paperwork Reduction Act, 

firms are required to report FR Y–14A, 

Schedule F, under the Internal baseline 

and supervisory severely adverse 

scenarios. 

A commenter opposed the proposed 

reporting changes as they would 

increase the reporting burden for firms 

subject to Category I, II, or III standards, 

and instead suggested that the Board 

add scenarios to the FR Y–14A, 

Schedule F—Business Plan Changes. 

Although the changes in the proposal 

would modestly increase reporting 

requirements for firms subject to 

Category I, II, or III standards that 

include material business plan changes 

in their capital plan submission, 

projections both inclusive and exclusive 

of material business plan changes are 

necessary for the Federal Reserve to 

monitor that a firm appropriately plans 

for changes to its business for purposes 

of capital planning. In addition, the 

proposed reporting changes ensure 


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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 7933 

25 12 U.S.C. 1461 et seq. 

26A covered savings and loan holding company 

is a savings and loan holding company not 

predominantly engaged in insurance or commercial 

activities (see 12 CFR 217.2). 

27The capital planning and stress capital buffer 

requirements for covered savings and loan holding 

companies subject to Category II, III, or IV standards 

are codified at 12 CFR 238.170. The Board also has 

made conforming changes to its capital rule and 

stress testing rules for covered savings and loan 

holding companies. 

28Covered savings and loan holding companies 

subject to Category II or III standards will be 

required to submit FR Y–14A, Schedule A— 

Summary, Schedule B—Scenario, Schedule C— 

Regulatory Capital Instruments, Schedule E— 

Operational Risk, and Schedule F—Business Plan 

Changes. Covered savings and loan holding 

companies subject to Category IV standards will be 

required to submit FR Y–14A, Schedule C— 

Regulatory Capital Instruments. 

reporting of company-run stress results 

that are comparable to the supervisory 

stress test results. These projections are 

also necessary for the Federal Reserve to 

be able to project stress losses and 

calculate the dividend add-on for the 

stress capital buffer requirement using 

the assumptions in the stress test rules. 

In response to the commenter’s 

suggestion, subtracting the values 

reported on FR Y–14A, Schedule F, 

from those reported on FR Y–14A, 

Schedule A, would not provide the 

impact of the business plan change on 

projections, as Schedule F only captures 

the ‘‘day one’’ impact of the business 

plan change. Therefore, the final rule 

adopts these reporting requirements as 

proposed. 

In addition, several commenters 

requested clarification about whether 

the proposed FR Y–14A reporting 

requirements include all or only 

material business plan changes. Under 

the final rule, firms should exclude the 

effects of material business plan changes 

from the ‘‘DFAST’’ sub-schedule of FR 

Y–14A, Schedule A—Summary, and the 

‘‘SCB’’ sub-schedule of Schedule C— 

Regulatory Capital Instruments. Firms 

should include only material business 

plan changes in FR Y–14A, Schedule 

F—Business Plan Changes. 

These revisions to the FR Y–14A will 

be effective as of the FR Y–14A 

submission due on April 5, 2021. 

E. Covered Savings and Loan Holding 

Companies 

i. Application of Capital Plan Rule 

The Board currently assesses the 

condition, performance, and activities of 

savings and loan holding companies on 

a consolidated basis in the same manner 

that the Board assesses the condition, 

performance, and activities of bank 

holding companies, taking into account 

any unique characteristics of savings 

and loan holding companies and the 

requirements of the Home Owners’ Loan 

Act.25 Under the tailoring rule, the 

Board applies supervisory stress testing 

requirements to covered savings and 

loan holding companies subject to 

Category II, III, or IV standards.26 The 

tailoring rule also applies company-run 

stress test requirements to covered 

savings and loan holding companies 

subject to Category II or III standards. 

The scale, complexity, and risk factors 

for these firms warrant more 

sophisticated capital planning, more 

frequent company-run stress testing, 

and greater supervisory oversight 

through supervisory stress testing than 

for smaller and less complex firms. To 

implement the supervisory stress test for 

covered savings and loan holding 

companies, the tailoring rule required a 

covered savings and loan holding 

company to report the FR Y–14 report 

in the same manner as a bank holding 

company. 

The proposal solicited comment on 

whether to apply capital planning and 

stress capital buffer requirements to 

covered savings and loan holding 

companies subject to Category II, III, or 

IV standards. In particular, the Board 

solicited comment on the advantages 

and disadvantages of applying these 

requirements to large covered savings 

and loan holding companies in the same 

manner as they apply to large bank 

holding companies, whether any 

adjustments to those requirements 

should be made for covered savings and 

loan holding companies, what other 

approaches to applying capital planning 

requirements to covered savings and 

loan holding companies the Board 

should consider, and whether the 

current transition period in the capital 

plan rule for large bank holding 

companies would be appropriate for 

covered savings and loan holding 

companies. The Board received two 

comments on this element of the 

proposal. Commenters suggested that 

the Board provide covered savings and 

loan holding companies the option to 

comply with capital planning and stress 

capital buffer requirements, particularly 

for those covered savings and loan 

holding companies that are subject to 

less risk. To the extent compliance is 

mandatory, commenters asserted that 

the Board should tailor the requirements 

to a covered savings and loan holding 

company’s risk profile and provide an 

extended transition period for covered 

savings and loan holding companies to 

come into compliance with such 

requirements. 

For the reasons set forth below, the 

Board is applying the capital planning 

and stress capital buffer requirements to 

covered savings and loan holding 

companies subject to Category II, III, or 

IV standards in the same manner as they 

apply to large bank holding companies 

subject to Category II, III, or IV 

standards.27 Additionally, the Board is 

adopting capital planning reporting 

requirements for covered savings and 

loan holding companies.28 A covered 

savings and loan holding company that 

becomes subject to capital planning 

requirements as of the effective date of 

this rule would be required to submit its 

first capital plan on April 5, 2022. 

Capital is central to a firm’s ability to 

absorb unexpected losses and continue 

to lend to creditworthy businesses and 

consumers. The Board’s capital 

planning requirements for large bank 

holding companies help to ensure that 

these firms have robust systems and 

processes that incorporate forwardlooking projections of revenue and 

losses to monitor and maintain their 

internal capital adequacy. The stress 

capital buffer requirement helps ensure 

that a firm can meet its obligations to 

creditors and other counterparties, as 

well as continue to serve as a financial 

intermediary through periods of 

financial and economic stress. As the 

Board noted in its final tailoring rule, 

covered savings and loan holding 

companies engage in many of the same 

activities and face similar risks as bank 

holding companies. Accordingly, the 

final rule applies capital planning and 

stress capital buffer requirements to 

covered savings and loan holding 

companies subject to Category II, III, or 

IV standards in the same manner as they 

apply to large bank holding companies 

subject to Category II, III, or IV 

standards. 

While commenters recommended that 

the Board permit a covered savings and 

loan holding company to opt out of 

these requirements because they have 

different risk profiles than similarly 

sized bank holding companies, the final 

rule does not include such an option 

because these requirements will 

promote the safety and soundness of a 

covered savings and loan holding 

company by ensuring that a covered 

savings and loan holding company is 

required to maintain capital 

commensurate with its risk profile and 

activities. Moreover, the capital 

planning and stress testing requirements 

that apply to bank holding companies 

do not provide for such an opt-out 

election. 

One commenter asserted that capital 

planning requirements should be 

appropriately tailored to the risk profile 

of covered savings and loan holding 

companies, including that these firms 


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7934 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 

29The Federal Reserve’s supervisory guidance for 

capital planning is also tailored to a firm’s risk 

profile. For example, the Federal Reserve SR Letter 

15–19 notes that ‘‘a firm should employ risk 

measurement approaches that are appropriate for its 

size, complexity, and risk profile.’’ See SR Letter 

15–19, ‘‘Federal Reserve Supervisory Assessment of 

Capital Planning and Positions for Large and 

Noncomplex Firms,’’ December 18, 2015. 

30See 12 CFR 238.143(b)(2)(ii); 12 CFR 

252.54(b)(2)(ii). 

should not be subject to the large 

counterparty default component or the 

qualitative objection, and should only 

have to file certain schedules of the FR 

Y–14A. The Board’s capital planning 

requirements are tailored based on a 

firm’s tailoring category as outlined 

above in Section I.B of this 

Supplementary Information section, as 

well as certain attributes of the firm that 

are independent of its tailoring category. 

Specifically, the components of the 

capital planning requirements that 

apply to a firm are naturally tailored as 

they require a firm’s capital plan to 

include an assessment of the expected 

uses and sources of capital over the 

planning horizon that reflects the firm’s 

size, complexity, risk profile, and scope 

of operations, assuming both expected 

and stressful conditions.29 Similarly, the 

large counterparty default component in 

the Board’s company-run stress testing 

requirements for bank holding 

companies and covered savings and 

loan holding companies is also tailored 

based on a firm’s risk profile as it only 

applies based on the firm’s financial 

condition, size, complexity, risk profile, 

scope of operations, or activities.30

Further, like the capital planning 

requirements for large bank holding 

companies, the Board will not have the 

ability to issue a qualitative objection to 

a covered savings and loan holding 

company’s capital plan; rather, it will 

conduct a robust qualitative review of 

covered savings and loan holding 

companies’ capital planning practices 

during the traditional supervisory 

process. Finally, reporting requirements 

on the FR Y–14A are also tailored, as 

certain firms are not required to 

complete certain schedules based on 

their size and complexity (i.e., firms 

subject to Category IV standards are not 

required to complete FR Y–14A, 

Schedule A—Summary). 

A commenter also asserted that the 

Board should provide a transition 

period until at least the 2024 capital 

planning cycle for covered and savings 

and loan holding companies to come 

into compliance with capital planning 

and stress capital buffer requirements, 

and should provide feedback on firms’ 

initial capital plans on a confidential 

basis without the initial submission 

being evaluated under the Federal 

Reserve’s LFI ratings framework. The 

commenter asserted that such a 

transition would provide the firm with 

additional time to understand the 

Federal Reserve’s supervisory 

expectations prior to receiving public 

feedback. 

Under the tailoring final rules, 

covered savings and loan holding 

companies were required to comply 

with stress testing requirements on the 

first day of the ninth quarter following 

the effective date of the final rule. A 

firm that was subject to the 

requirements on the date of the tailoring 

final rule would be required to comply 

with stress testing requirements for the 

2022 stress test cycle. In addition, a firm 

would be required to file its first FR Y– 

14A submission on April 5, 2022. To 

align the stress testing requirements 

with the capital planning requirements, 

the capital plan rule applicable to 

covered savings and loan holding 

companies would have the same 

transition provision as the rule 

applicable to bank holding companies. 

Specifically, a firm that becomes subject 

to the rule on or before September 30 of 

a calendar year must comply with the 

rule on January 1 of the next calendar 

year and a firm that becomes subject to 

the rule after September 30 of a calendar 

year must comply with the requirements 

beginning on January 1 of the second 

calendar year after it meets the relevant 

threshold. A covered savings and loan 

holding company will not receive a 

stress capital buffer requirement until 

the first year the Board conducts a 

supervisory stress test of the firm. 

Moreover, the Federal Reserve 

generally does not provide firms with 

public feedback on their capital plans. 

However, the initial submission will 

provide the Federal Reserve with 

information about the firm’s capital 

planning practices that will be 

considered as part of the firm’s rating 

evaluation. 

The Board also proposed to revise the 

FR Y–14A report to require covered 

savings and loan holding companies 

subject to Category II or III standards to 

submit FR Y–14A, Schedule A— 

Summary, Schedule B—Scenario, 

Schedule E—Operational Risk, and 

Schedule F—Business Plan Changes, as 

these schedules are needed for the 

company-run and supervisory stress 

tests and for capital planning 

supervision. In the proposal, the Board 

asked whether it should revise the 

regulatory reporting requirements for 

covered savings and loan holding 

companies if they were to become 

subject to the capital plan rule. Given 

that the Board is applying capital 

planning and stress capital buffer 

requirements to savings and loan 

holding companies, the Board is also 

requiring covered savings and loan 

holding companies subject to Category 

II, III, or IV standards to submit FR Y– 

14A, Schedule C—Regulatory Capital 

Instruments, as this schedule is 

essential for monitoring compliance 

with the capital plan rule. Requiring 

covered savings and loan holding 

companies to submit this information 

would better align the FR Y–14A 

reporting requirements for firms with 

similar risk characteristics. 

ii. Stress Test Rule Changes 

As a part of the tailoring rule, covered 

savings and loan holding companies 

were made subject to the Board’s 

supervisory stress test and company-run 

stress test requirements in the same 

manner as bank holding companies. 

Currently, the capital action 

assumptions in the stress test rules for 

covered savings and loan holding 

companies are different than those for 

bank holding companies because they 

were not included in the stress capital 

buffer rule, in which the Board updated 

the distribution assumptions for bank 

holding companies. The proposal would 

have amended the stress test rules for 

covered savings and loan holding 

companies so the capital distribution 

assumptions for covered savings and 

loan holding companies would match 

the assumptions for bank holding 

companies. 

The proposal also would have 

addressed an omission in the Board’s 

company-run stress test requirements to 

ensure that all savings and loan holding 

companies with more than $250 billion 

in assets are required to publicly 

disclose the results of their stress tests, 

similar to the requirement for bank 

holding companies. This would have 

ensured the requirements are consistent 

with the Dodd-Frank Act. 

No comments were received on these 

aspects of the proposal, and the final 

rule adopts them as proposed. 

F. Definition of Common Stock Dividend 

in Capital Plan Rule 

As a part of the proposal, the Board 

sought comment on a definition for 

common stock dividends in the capital 

plan rule. The proposal noted that the 

definition of common stock dividend 

could be aligned with the definition on 

the FR Y–9C or could include payments 

of cash to parent organizations 

irrespective of whether the amount paid 

is debited from the firm’s retained 

earnings. 

Some commenters, particularly 

foreign banking organizations, opposed 

a definition of dividends for the capital 


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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 7935 

31SR letter 15–18, ‘‘Federal Reserve Supervisory 

Assessment of Capital Planning and Positions for 

LISCC Firms and Large and Complex Firms,’’ 

December 18, 2015. See https://

www.federalreserve.gov/supervisionreg/srletters/ 

sr1518.htm. 

32SR letter 15–19, ‘‘Federal Reserve Supervisory 

Assessment of Capital Planning and Positions for 

Large and Noncomplex Firms,’’ December 18, 2015. 

See https://www.federalreserve.gov/supervisionreg/ 

srletters/sr1519.htm. 

33SR letter 09–4, ‘‘Applying Supervisory 

Guidance and Regulations on the Payment of 

Dividends, Stock Redemptions, and Stock 

Repurchases at Bank Holding Companies,’’ 

February 24, 2009. See https://

www.federalreserve.gov/boarddocs/srletters/2009/ 

SR0904.htm. 

34 ‘‘UNSOUND BANKING PRACTICES—Cash 

Dividends Not Fully Covered by Earnings,’’ 

November 14, 1985. See https://

www.federalreserve.gov/boarddocs/srletters/2009/ 

sr0904a2.pdf. 

35Covered SLHCs are those which are not 

substantially engaged in insurance or commercial 

activities. For more information, see the definition 

of ‘‘covered savings and loan holding company’’ 

provided in 12 CFR 217.2 and 12 CFR 238.2(ff). 

Covered SLHCs with $100 billion or more in total 

consolidated assets became members of the FR Y– 

14Q and FR Y–14M panels effective June 30, 2020, 

and will become members of the FR Y–14A panel 

effective December 31, 2021. See 84 FR 59032 

(November 1, 2019). 

36The estimated number of respondents for the 

FR Y–14M is lower than for the FR Y–14Q and FR 

Y–14A because, in recent years, certain respondents 

to the FR Y–14A and FR Y–14Q have not met the 

materiality thresholds to report the FR Y–14M due 

to their lack of mortgage and credit activities. The 

Board expects this situation to continue for the 

foreseeable future. 

plan rule. These commenters noted that 

the definition provided in the proposal 

was overly broad and could capture 

capital actions that may not be 

considered dividends from corporate 

law or accounting perspectives. 

Additionally, they noted that the 

definition could have unforeseen 

consequences on intercompany 

agreements, including payments for 

intercompany services, tax sharing, and 

other purposes. 

The Board is not at this time adopting 

a definition of dividends for the capital 

plan rule. The FR Y–14A defines 

dividends by referencing the definition 

of dividend in the Glossary to the FR Y– 

9C instructions. That definition 

provides, among other things, that cash 

dividends are ‘‘payments of cash to 

shareholders in proportion to the 

number of shares they own.’’ Firms 

should continue to use this definition 

when reporting the FR Y–14A. 

The Board will continue to monitor 

firm behavior on the classification of 

capital actions and the timing of those 

actions over the capital plan projection 

horizon. Using this information, the 

Board will continue to consider whether 

a definition of dividends for the capital 

plan rule is required in order to provide 

comparable treatment to all firms 

subject to the requirements. 

G. Impact Analysis 

The regulatory reporting aspects of 

the final rule include additional 

compliance burden on firms subject to 

Category I through III standards, but a 

reduction in compliance burden on 

firms subject to Category IV standards. 

Covered savings and loan holding 

companies have not been subject to 

supervisory stress testing requirements 

to date. One covered savings and loan 

holding company would become subject 

to the requirements based on third 

quarter 2020 data, and this firm is 

currently constrained by its leverage 

requirement. It is estimated that this 

firm’s stress capital buffer would need 

to be over 2.75 times the median of 

firms’ 2020 stress capital buffers for 

there to be an increase in its capital 

requirements. 

II. Board Guidance on Capital Planning 

The Board has issued guidance 

related to sound capital planning 

practices that has been tailored based on 

the size, scope of operations, activities, 

and systemic importance of a firm. In 

the proposal, the Board requested 

comment on all aspects of its guidance 

on capital planning for firms of all sizes, 

consistent with its ongoing practice of 

reviewing its policies to ensure that they 

are having their intended effect. The 

Board’s key capital planning guidance 

includes supervision and regulation 

(SR) letters, ‘‘Federal Reserve 

Supervisory Assessment of Capital 

Planning and Positions for LISCC Firms 

and Large and Complex Firms’’ (SR 15– 

18),31 ‘‘Federal Reserve Supervisory 

Assessment of Capital Planning and 

Positions for Large and Noncomplex 

Firms’’ (SR 15–19),32 ‘‘Applying 

Supervisory Guidance and Regulations 

on the Payment of Dividends, Stock 

Redemptions, and Stock Repurchases at 

Bank Holding Companies’’ (SR 09–4),33

and the ‘‘Policy Statement on the 

Payment of Cash Dividends.’’ 34 The 

Board also encouraged feedback on any 

other aspects of its guidance that relate 

to capital planning. 

The Board received numerous 

comments on its capital planning 

guidance. The Board will address these 

comments separately. 

III. Administrative Law Matters 

A. Paperwork Reduction Act 

Certain provisions of the final rule 

contain ‘‘collections of information’’ 

within the meaning of the Paperwork 

Reduction Act of 1995 (PRA) (44 U.S.C. 

3501–3521). The Board may not conduct 

or sponsor, and a respondent is not 

required to respond to, an information 

collection unless it displays a currently 

valid Office of Management and Budget 

(OMB) control number. The Board 

reviewed the final rule under the 

authority delegated to the Board by 

OMB. 

The proposed rule would have 

revised collection of information 

requirements subject to the PRA. The 

Board proposed to revise the FR Y–14A/ 

Q/M, FR LL, and the FR YY to reflect 

the changes proposed in the proposed 

rule. The OMB control numbers are 

7100–0341, 7100–0380, and 7100–0350, 

respectively. The Board received no 

comments regarding these proposed 

revisions under the PRA, and is 

adopting the revisions as proposed, with 

certain modifications to account for 

changes between the proposed rule and 

final rule. 

Revisions, With Extension for Three 

Years, of the Following Information 

Collections: 

(1) Report title: Capital Assessments 

and Stress Testing Reports. 

Agency form number: FR Y–14A/Q/ 

M. 

OMB control number: 7100–0341. 

Frequency: Annually, quarterly, and 

monthly. 

Respondents: These collections of 

information are applicable to bank 

holding companies (BHCs), U.S. 

intermediate holding companies (IHCs), 

and covered savings and loan holding 

companies (SLHCs) 35 with $100 billion 

or more in total consolidated assets, as 

based on: (i) The average of the firm’s 

total consolidated assets in the four 

most recent quarters as reported 

quarterly on the firm’s Consolidated 

Financial Statements for Holding 

Companies (FR Y–9C; OMB No. 7100– 

0128); or (ii) if the firm has not filed an 

FR Y–9C for each of the most recent four 

quarters, then the average of the firm’s 

total consolidated assets in the most 

recent consecutive quarters as reported 

quarterly on the firm’s FR Y–9Cs. 

Reporting is required as of the first day 

of the quarter immediately following the 

quarter in which the respondent meets 

this asset threshold, unless otherwise 

directed by the Board. 

Estimated number of respondents: FR 

Y–14A/Q: 36; FR Y–14M: 34.36

Estimated average hours per response: 

FR Y–14A: 1,250 hours; FR Y–14Q: 

2,143 hours; FR Y–14M: 1,072 hours; FR 

Y–14 On-going Automation Revisions: 

480 hours; FR Y–14 Attestation Ongoing Attestation: 2,560 hours. 

Estimated annual burden hours: FR 

Y–14A: 45,000 hours; FR Y–14Q: 

308,592 hours; FR Y–14M: 437,376 

hours; FR Y–14 On-going Automation 


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7936 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 

37 In certain circumstances, a BHC, IHC, or SLHC 

may be required to re-submit its capital plan. See 

12 CFR 225.8(e)(4); 12 CFR 238.170(e)(4). Firms that 

must re-submit their capital plan generally also 

must provide a revised FR Y–14A in connection 

with their resubmission. 

Revisions: 17,280 hours; FR Y–14 

Attestation On-going Attestation: 33,280 

hours. 

General description of report: This 

family of information collections is 

composed of the following three reports: 

• The annual 37 FR Y–14A collects 

quantitative projections of balance 

sheet, income, losses, and capital across 

a range of macroeconomic scenarios and 

qualitative information on 

methodologies used to develop internal 

projections of capital across scenarios. 

• The quarterly FR Y–14Q collects 

granular data on various asset classes, 

including loans, securities, trading 

assets, and pre-provision net revenue for 

the reporting period. 

• The monthly FR Y–14M is 

comprised of three retail portfolio- and 

loan-level schedules, and one detailed 

address-matching schedule to 

supplement two of the portfolio and 

loan-level schedules. 

The data collected through the FR Y– 

14A/Q/M reports provide the Board 

with the information needed to help 

ensure that large firms have strong, 

firm-wide risk measurement and 

management processes supporting their 

internal assessments of capital adequacy 

and that their capital resources are 

sufficient given their business focus, 

activities, and resulting risk exposures. 

The reports are used to support the 

Board’s annual CCAR and Dodd-Frank 

Act Stress Test (DFAST) exercises, 

which complement other Board 

supervisory efforts aimed at enhancing 

the continued viability of large firms, 

including continuous monitoring of 

firms’ planning and management of 

liquidity and funding resources, as well 

as regular assessments of credit, market 

and operational risks, and associated 

risk management practices. Information 

gathered in this data collection is also 

used in the supervision and regulation 

of respondent financial institutions. 

Respondent firms are currently required 

to complete and submit up to 17 filings 

each year: One annual FR Y–14A filing, 

four quarterly FR Y–14Q filings, and 12 

monthly FR Y–14M filings. Compliance 

with the information collection is 

mandatory. 

Current Actions: As previously 

described in this notice, the Board 

proposed to make several FR Y–14A/Q/ 

M revisions. Certain revisions would 

only be applicable to firms subject to 

Category IV or Category I–III standards, 

while other revisions would be 

applicable to all BHCs, IHCs, and 

SLHCs. The Board has adopted all 

revisions as proposed, except that some 

revisions are effective for the December 

31, 2020, as of date, and some are 

effective for the December 31, 2021, as 

of date. 

Firms Subject to Category IV standards 

As a result of the adopted changes to 

company-run stress testing 

requirements, the Board has no longer 

required that firms subject to Category 

IV standards report FR Y–14A Schedule 

A—Summary, Schedule B—Scenario, 

Schedule F—Business Plan Changes, 

and Appendix A—Supporting 

Documentation, which are used to 

report a firm’s company-run stress test 

results. Firms subject to Category IV 

standards are no longer required to 

submit these schedules beginning with 

the December 31, 2020, as of date. 

However, firms subject to Category IV 

standards are still required to complete 

all remaining FR Y–14A schedules, as 

they are necessary for the Board to run 

its supervisory stress test. The Board 

believes that the detailed balance sheet 

information collected on a monthly and 

quarterly basis from firms subject to 

Category IV standards on the FR Y–14Q 

and FR Y–14M is crucial for 

maintaining the integrity of the stress 

tests, monitoring financial stability, and 

supervising those firms. 

Firms Subject to Category I–III 

Standards 

As previously outlined, firms subject 

to Category I—III standards are still 

required to report FR Y–14A, Schedule 

A—Summary. To conform the FR Y–14 

reports with the stress test assumption 

changes made per the stress capital 

buffer rule, the Board has created two 

sub-schedules for all items on the FR Y– 

14A, Schedule A, effective for the 

December 31, 2020, as of date: (1) 

DFAST, where a firm would not 

incorporate the effects of material 

business plan changes and (2) CCAR, 

where a firm would incorporate the 

effects of business plan changes. 

Specifically, firms subject to Category 

I—III standards are required to report a 

version of FR Y–14A, Schedule A.1.a— 

Income Statement, Schedule A.1.b— 

Balance Sheet, Schedule A.1.c.1— 

Standardized RWA, Schedule A.1.d— 

Capital, Schedule A.2.a—Retail Balance 

and Loss, Schedule A.3—AFS/HTM 

Securities, Schedule A.4—Trading, 

Schedule A.5—Counterparty Credit 

Risk, Schedule A.6—Operational Risk, 

and Loss Projections, and Schedule 

A.7—Pre-Provision Net Revenue, that 

incorporates the effects of business plan 

changes, as well as a version of these 

schedules and items that does not 

incorporate the effects of material 

business plan changes. For Schedule 

A.1.d, firms subject to Category I—III 

standards are still required to report two 

sub-schedules with different capital 

actions, along with the income and 

balance sheet information reported in 

the appropriate sub-schedule. In 

addition, effective for the December 31, 

2020, as of date, firms subject to 

Category I—III standards are only 

required to report FR Y–14A, Schedule 

F under the Internal baseline and 

supervisory severely adverse scenarios. 

All BHCs and IHCs 

All BHCs and IHCs are still required 

to report FR Y–14A, Schedule C— 

Regulatory Capital Instruments, and the 

stress test assumption changes made per 

the stress capital buffer rule create a 

need for firms to provide certain data 

excluding the impact of material 

business plan changes. As a result, the 

Board has created two sub-schedules for 

all items on the FR Y–14A, Schedule C: 

(1) SCB, where a firm does not 

incorporate the effects of material 

business plan changes and (2) CCAR, 

where a firm does incorporate the 

effects of business plan changes. 

Specifically, all BHCs and IHCs are 

required to report a version of FR Y– 

14A, Schedule C that incorporates the 

effects of material business plan 

changes, as well as a version of this 

schedule and items that does not 

incorporate these effects. These 

revisions are effective for the December 

31, 2020, as of date. 

In order to be able to assess whether 

a firm’s planned capital distributions 

included in its capital plan are 

consistent with any effective capital 

distribution limitations that would 

apply under the firm’s baseline 

projections, as required by the capital 

plan rule, the Board has added four 

items to FR Y–14A, Schedule C. These 

items capture baseline projections of a 

firm’s common equity tier 1 capital 

ratio, tier 1 capital ratio, total capital 

ratio, and net income. These revisions 

are effective for the December 31, 2020, 

as of date. 

SLHCs 

In order to assess compliance with the 

stress testing and capital plan rules, the 

Board has required SLHCs subject to 

Category II, or III standards to submit FR 

Y–14A, Schedule B—Scenario, and has 

required SLHCs subject to Category II, 

III, or IV standards to submit FR Y–14A, 

Schedule C—Regulatory Capital 

Instruments. These revisions align with 

the spirit of the tailoring rule, as it 

would require all firms subject to 


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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 7937 

applicable Category standards to largely 

submit the same FR Y–14A information. 

These revisions are effective for the 

December 31, 2021, as of date. 

Other Revisions 

As previously mentioned, the Board 

has replaced the current definition of 

‘‘large and noncomplex bank holding 

company’’ in the capital plan rule with 

the definition of a firm subject to 

Category IV standards. Therefore, the 

Board has made this change across the 

FR Y–14A/Q/M reports. In addition, to 

more accurately reflect the types of 

firms subject to the stress test reporting 

requirements, the Board has renamed 

the ‘‘BHC baseline scenario’’ and ‘‘BHC 

stress scenario’’ to ‘‘Internal baseline 

scenario’’ and ‘‘Internal stress scenario,’’ 

respectively. These revisions are 

effective for the December 31, 2020, as 

of date. 

(2) Report title: Reporting, 

Recordkeeping, and Disclosure 

Requirements Associated with 

Regulation LL. 

Agency form number: FR LL. 

OMB control number: 7100–0380. 

Frequency: Biennial, annual. 

Affected Public: Businesses or other 

for-profit. 

Respondents: Savings and loan 

holding companies. 

Estimated number of respondents: 1. 

Estimated average hours per response: 

Reporting 

Section 238.132(c)(2)(ii)—0.25, 

Section 238.162(b)(1)(ii)—80, 

Section 238.170(e)(1)(ii)—80, 

Section 238.170(e)(3)—1,005, 

Section 238.170(e)(4)—100, 

Section 238.170(h)(2)(ii)(B)—2, 

Section 238.170(i)—16, 

Section 238.170(j)(1) and (2)—100, 

Section 238.170(j)(4)—16, 

Recordkeeping 

Section 238.170(e)(1)(i)—8,920, 

Section 238.170(e)(1)(iii)—100, 

Disclosure 

Section 238.146 (initial setup)—150, 

Section 238.146—60. 

Estimated annual burden hours: 

Reporting 

Section 238.132(c)(2)(ii)—0, 

Section 238.162(b)(1)(ii)—40, 

Section 238.170(e)(1)(ii)—80, 

Section 238.170(e)(3)—1,005, 

Section 238.170(e)(4)—100, 

Section 238.170(h)(2)(ii)(B)—2, 

Section 238.170(i)—16, 

Section 238.170(j)(1) and (2)—100, 

Section 238.170(j)(4)—16, 

Recordkeeping 

Section 238.170(e)(1)(i)—8,920, 

Section 238.170(e)(1)(iii)—100, 

Disclosure 

Section 238.146 (initial setup)—75, 

Section 238.146—30. 

Legal authorization and 

confidentiality: This information 

collection is authorized by section 10 of 

the Home Owners’ Loan Act (HOLA) 

and section 165(i)(2) of the Dodd-Frank 

Act. The obligation of covered 

institutions to report this information is 

mandatory. This information would be 

disclosed publicly and, as a result, no 

issue of confidentiality is raised. 

Current Actions: The final rule 

includes amendments to § 238.146 of 

Regulation LL meant to ensure that 

certain savings and loan holding 

companies are required to publicly 

disclose their stress tests results. Under 

the final rule, a covered savings and 

loan holding company that is subject to 

a supervisory stress test under § 238.132 

of Regulation LL is required to publicly 

disclose a summary of the results of the 

stress test required under § 238.143 of 

Regulation LL within the period that is 

15 calendar days after the Board 

publicly discloses the results of its 

supervisory stress test of the covered 

company pursuant to § 238.134 of 

Regulation LL, unless that time is 

extended by the Board in writing, while 

a covered savings and loan holding 

company that is not subject to a 

supervisory stress test under § 238.132 

of Regulation LL is required to publicly 

disclose a summary of the results of the 

stress test required under § 238.143 of 

Regulation LL in the period beginning 

on June 15 and ending on June 30 in the 

year in which the stress test is 

conducted, unless that time is extended 

by the Board in writing. 

Additionally, the final rule applies 

capital planning and stress capital 

buffer requirements to covered savings 

and loan holding companies subject to 

Category II, III, or IV standards. These 

savings and loan holding companies 

will be required to submit capital plans 

to the Board on an annual basis, and to 

request prior approval from the Board 

under certain circumstances before 

making a capital distribution. 

The Board also has revised Regulation 

LL to permit a savings and loan holding 

company subject to Category IV 

standards to elect to participate in the 

supervisory stress test in a year in 

which the firm would not normally be 

subject to the supervisory stress test. To 

ensure the Board is provided sufficient 

notice that the firm is participating in 

the supervisory stress test, the firm 

would need to make its election by 

January 15 of the year in which it seeks 

to opt in to the supervisory stress test 

by providing written notice to the Board 

and appropriate Federal Reserve Bank. 

(3) Report title: Reporting, 

Recordkeeping, and Disclosure 

Requirements Associated with 

Regulation YY (Enhanced Prudential 

Standards). 

Agency Form Number: FR YY. 

OMB Control Number: 7100–0350. 

Frequency: Annual, semiannual, 

quarterly. 

Affected Public: Businesses or other 

for-profit. 

Respondents: State member banks, 

U.S. bank holding companies, nonbank 

financial companies, foreign banking 

organizations, U.S. intermediate holding 

companies, foreign saving and loan 

holding companies, and foreign 

nonbank financial companies 

supervised by the Board. 

Estimated number of respondents: 23 

U.S. bank holding companies with total 

consolidated assets of $100 billion or 

more, 4 U.S. bank holding companies 

with total consolidated assets of $50 

billion or more but less than $100 

billion, 1 state member bank with total 

consolidated assets over $250 billion, 11 

U.S. intermediate holding companies 

with $100 billion or more in total assets, 

23 foreign banking organizations with 

total consolidated assets of more than 

$50 billion but less than $100 billion; 23 

foreign banking organizations with total 

consolidated assets of $100 billion or 

more but combined U.S. operations of at 

least $50 billion but less than $100 

billion; 17 foreign banking organizations 

with total consolidated assets of $100 

billion or more and combined U.S. 

operations of $100 billion or more. 

Estimated annual burden hours: 

27,752 hours. 

General description of report: Section 

165 of the Dodd-Frank Act, as amended 

by EGRRCPA, requires the Board to 

implement enhanced prudential 

standards for bank holding companies 

and foreign banking organizations with 

total consolidated assets of $250 billion 

or more, and provides the Board with 

discretion to apply enhanced prudential 

standards to certain bank holding 

companies and foreign banking 

organizations with $100 billion or more, 

but less than $250 billion, in total 

consolidated assets. The enhanced 

prudential standards include risk-based 

and leverage capital requirements, 

liquidity standards, requirements for 

overall risk management (including 

establishing a risk committee), stress 

test requirements, and debt-to-equity 

limits for companies that the Financial 

Stability Oversight Council has 

determined pose a grave threat to 

financial stability. 


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7938 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 

38 5 U.S.C. 601 et. seq. 39See 13 CFR 121.201. Effective August 19, 2019, 

the SBA revised the size standards for certain 

banking organizations to $600 million in assets 

from $550 million in assets. See 84 FR 34261 (July 

18, 2019). Consistent with the General Principles of 

Affiliation in 13 CFR 121.103, the Board counts the 

assets of all domestic and foreign affiliates when 

determining if the Board should classify a Boardsupervised institution as a small entity. 

40 12 CFR part 217. 

41 12 CFR part 225. 

42 12 CFR part 238. 

43 12 CFR part 252. 

Current Actions: As described above, 

the Board has amended Regulation YY 

to allow a firm subject to Category IV 

standards to elect to participate in the 

supervisory stress test in a year in 

which the firm would not normally be 

subject to the supervisory stress test. To 

ensure the Board is provided sufficient 

notice that the firm is participating in 

the supervisory stress test, the firm 

would need to make its election by 

January 15 of the year in which it seeks 

to opt in to the supervisory stress test 

by providing written notice to the Board 

and appropriate Federal Reserve Bank. 

For purposes of calculating the stress 

capital buffer requirement in 2021 for a 

firm subject to Category IV standards 

that elects to participate in the 2021 

supervisory stress test, the final rule 

includes transitional procedures such 

that the firm could notify the Board by 

April 5, 2021. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires that, in connection 

with a final rulemaking, an agency 

prepare and make available for public 

comment a final regulatory flexibility 

analysis describing the impact of the 

proposed rule on small entities.38

However, a final regulatory flexibility 

analysis is not required if the agency 

certifies that the final rule will not have 

a significant economic impact on a 

substantial number of small entities. 

The Small Business Administration 

(SBA) has defined ‘‘small entities’’ to 

include banking organizations with total 

assets of less than or equal to $600 

million that are independently owned 

and operated or owned by a holding 

company with less than or equal to $600 

million in total assets.39 For the reasons 

described below and under section 

605(b) of the RFA, the Board certifies 

that the final rule will not have a 

significant economic impact on a 

substantial number of small entities. As 

of December 31, 2019, there were 2,799 

bank holding companies, 171 savings 

and loan holding companies, and 497 

state member banks that would fit the 

SBA’s current definition of ‘‘small 

entity’’ for purposes of the RFA. 

In connection with the proposed rule, 

the Board stated that it did not believe 

the proposed rule would have a 

significant economic impact on a 

substantial number of small entities. 

Nevertheless, the Board published and 

invited comment on an initial regulatory 

flexibility analysis of the proposed rule. 

No comments were received on the 

initial regulatory flexibility analysis. 

The Board is finalizing amendments 

to Regulations Q,40 Y,41 LL,42 and YY 43

that would affect the regulatory 

requirements that apply to bank holding 

companies, intermediate holding 

companies and covered savings and 

loan holding companies with total 

consolidated assets of at least $100 

billion in total consolidated assets and 

any nonbank financial company 

supervised by the Board that becomes 

subject to the capital planning 

requirements pursuant to a rule or order 

of the Board. The reasons and 

justification for the final rule are 

described above in more detail in this 

SUPPLEMENTARY INFORMATION. 

The Board has considered whether to 

conduct a final regulatory flexibility 

analysis in connection with this final 

rule. However, the assets of institutions 

subject to this final rule substantially 

exceed the $600 million asset threshold 

under which a banking organization is 

considered a ‘‘small entity’’ under SBA 

regulations. Because the final rule is not 

likely to apply to any depository 

institution or company with assets of 

$600 million or less, it is not expected 

to apply to any small entity for purposes 

of the RFA. The Board does not believe 

that the final rule duplicates, overlaps, 

or conflicts with any other Federal 

rules. In light of the foregoing, the Board 

certifies that the final rule will not have 

a significant economic impact on a 

substantial number of small entities 

supervised. 

C. Solicitation of Comments of Use of 

Plain Language 

Section 722 of the Gramm-LeachBliley Act (Pub. L. 106–102, 113 Stat. 

1338, 1471, 12 U.S.C. 4809) requires the 

federal banking agencies to use plain 

language in all proposed and final rules 

published after January 1, 2000. The 

Board has sought to present the final 

rule in a simple and straightforward 

manner and did not receive any 

comments on the use of plain language. 

List of Subjects 

12 CFR Part 217 

Administrative practice and 

procedure, Banks, Banking, Capital, 

Federal Reserve System, Holding 

companies, Reporting and 

recordkeeping requirements, Risk, 

Securities. 

12 CFR Part 225 

Administrative practice and 

procedure, Banks, Banking, Capital 

planning, Holding companies, Reporting 

and recordkeeping requirements, 

Securities, Stress testing. 

12 CFR Part 238 

Administrative practice and 

procedure, Banks, Banking, Federal 

Reserve System, Reporting and 

recordkeeping requirements, Securities. 

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, chapter II 

of title 12 of the Code of Federal 

Regulations is amended as follows: 

PART 217—CAPITAL ADEQUACY OF 

BANK HOLDING COMPANIES, 

SAVINGS AND LOAN HOLDING 

COMPANIES, AND STATE MEMBER 

BANKS (REGULATION Q) 

■ 1. The authority citation for part 217 

continues to read as follows: 

Authority: 12 U.S.C. 248(a), 321–338a, 

481–486, 1462a, 1467a, 1818, 1828, 1831n, 

1831o, 1831p–1, 1831w, 1835, 1844(b), 1851, 

3904, 3906–3909, 4808, 5365, 5368, 5371, 

5371 note, and sec. 4012, Pub. L. 116–136, 

134 Stat. 281. 

Subpart B—Capital Ratio 

Requirements and Buffer 

■ 2. Amend § 217.11 by: 

■ a. Revising paragraphs (a)(2)(iii) and 

(vi) and paragraphs (a)(3)(i) introductory 

text and (a)(4); 

■ b. Revising the paragraph (c) subject 

heading and paragraphs (c)(1)(i) and (ii), 

(c)(1)(iii) introductory text, and (c)(1)(iv) 

introductory text, (c)(1)(v) introductory 

text, and (c)(vi) introductory text; and 

■ c. Correctly designating the second 

occurrence of paragraph (c)(1)(v) as 

paragraph (c)(1)(vii); and 

■ d. Revising paragraph (c)(2). 

The revisions read as follows: 

§ 217.11 Capital conservation buffer, 

countercyclical capital buffer amount, and 

GSIB surcharge. 

(a) * * * 

(2) * * * 

(iii) Maximum payout ratio. The 

maximum payout ratio is the percentage 

of eligible retained income that a BoardVerDate Sep<11>2014 15:49 Feb 02, 2021 Jkt 253001 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 E:\FR\FM\03FER1.SGM 03FER1

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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 7939 

regulated institution can pay out in the 

form of distributions and discretionary 

bonus payments during the current 

calendar quarter. For a Board-regulated 

institution that is not subject to 12 CFR 

225.8 or 238.170, the maximum payout 

ratio is determined by the Boardregulated institution’s capital 

conservation buffer, calculated as of the 

last day of the previous calendar 

quarter, as set forth in Table 1 to 

paragraph (a)(4)(iv) of this section. For 

a Board-regulated institution that is 

subject to 12 CFR 225.8 or 238.170, the 

maximum payout ratio is determined 

under paragraph (c)(1)(ii) of this section. 

* * * * * 

(vi) Stress capital buffer requirement. 

(A) The stress capital buffer requirement 

for a Board-regulated institution subject 

to 12 CFR 225.8 or 238.170 is the stress 

capital buffer requirement determined 

under 12 CFR 225.8 or 238.170 except 

as provided in paragraph (a)(2)(vi)(B) of 

this section. 

(B) If a Board-regulated institution 

subject to 12 CFR 225.8 or 238.170 has 

not yet received a stress capital buffer 

requirement, its stress capital buffer 

requirement for purposes of this part is 

2.5 percent. 

(3) * * * 

(i) A Board-regulated institution that 

is not subject to 12 CFR 225.8 or 

238.170 has a capital conservation 

buffer equal to the lowest of the 

following ratios, calculated as of the last 

day of the previous calendar quarter: 

* * * * * 

(4) Limits on distributions and 

discretionary bonus payments. (i) A 

Board-regulated institution that is not 

subject 12 CFR 225.8 or 238.170 shall 

not make distributions or discretionary 

bonus payments or create an obligation 

to make such distributions or payments 

during the current calendar quarter that, 

in the aggregate, exceed its maximum 

payout amount. 

(ii) A Board-regulated institution that 

is not subject 12 CFR 225.8 or 238.170 

and that has a capital conservation 

buffer that is greater than 2.5 percent 

plus 100 percent of its applicable 

countercyclical capital buffer amount in 

accordance with paragraph (b) of this 

section is not subject to a maximum 

payout amount under paragraph 

(a)(2)(ii) of this section. 

(iii) Except as provided in paragraph 

(a)(4)(iv) of this section, a Boardregulated institution that is not subject 

to 12 CFR 225.8 or 238.170 may not 

make distributions or discretionary 

bonus payments during the current 

calendar quarter if the Board-regulated 

institution’s: 

(A) Eligible retained income is 

negative; and 

(B) Capital conservation buffer was 

less than 2.5 percent as of the end of the 

previous calendar quarter. 

(iv) Prior approval—notwithstanding 

the limitations in paragraphs (a)(4)(i) 

through (iii) of this section, the Board 

may permit a Board-regulated 

institution that is not subject to 12 CFR 

225.8 or 238.170 to make a distribution 

or discretionary bonus payment upon a 

request of the Board-regulated 

institution, if the Board determines that 

the distribution or discretionary bonus 

payment would not be contrary to the 

purposes of this section, or to the safety 

and soundness of the Board-regulated 

institution. In making such a 

determination, the Board will consider 

the nature and extent of the request and 

the particular circumstances giving rise 

to the request. 

TABLE 1 TO § 217.11(A)(4)(IV)—CALCULATION OF MAXIMUM PAYOUT AMOUNT

Capital conservation buffer Maximum 

payout ratio 

Greater than 2.5 percent plus 100 percent of the Board-regulated institution’s applicable countercyclical capital buffer 

amount.

No payout ratio limitation applies. 

Less than or equal to 2.5 percent plus 100 percent of the Board-regulated institution’s applicable countercyclical capital 

buffer amount, and greater than 1.875 percent plus 75 percent of the Board-regulated institution’s applicable countercyclical capital buffer amount.

60 percent. 

Less than or equal to 1.875 percent plus 75 percent of the Board-regulated institution’s applicable countercyclical capital buffer amount, and greater than 1.25 percent plus 50 percent of the Board-regulated institution’s applicable countercyclical capital buffer amount.40 percent. 

Less than or equal to 1.25 percent plus 50 percent of the Board-regulated institution’s applicable countercyclical capital 

buffer amount and greater than 0.625 percent plus 25 percent of the Board-regulated institution’s applicable countercyclical capital buffer amount.

20 percent. 

Less than or equal to 0.625 percent plus 25 percent of the Board-regulated institution’s applicable countercyclical capital buffer amount.0 percent. 

(v) Other limitations on distributions. 

Additional limitations on distributions 

may apply under 12 CFR 225.4 and 

263.202 to a Board-regulated institution 

that is not subject to 12 CFR 225.8 or 

238.170. 

* * * * * 

(c) Calculation of buffers for Boardregulated institutions subject to 12 CFR 

225.8 or 238.170— 

(1) * * * 

(i) A Board-regulated institution that 

is subject to 12 CFR 225.8 or 238.170 

shall not make distributions or 

discretionary bonus payments or create 

an obligation to make such distributions 

or payments during the current calendar 

quarter that, in the aggregate, exceed its 

maximum payout amount. 

(ii) Maximum payout ratio. The 

maximum payout ratio of a Boardregulated institution that is subject to 12 

CFR 225.8 or 238.170 is the lowest of 

the payout ratios determined by its 

standardized approach capital 

conservation buffer; if applicable, 

advanced approaches capital 

conservation buffer; and, if applicable, 

leverage buffer; as set forth in table 2 to 

§ 217.11(c)(4)(iii). 

(iii) Capital conservation buffer 

requirements. A Board-regulated 

institution that is subject to 12 CFR 

225.8 or 238.170 has: 

* * * * * 

(iv) No maximum payout amount 

limitation. A Board-regulated institution 

that is subject to 12 CFR 225.8 or 

238.170 is not subject to a maximum 

payout amount under paragraph 

(a)(2)(ii) of this section if it has: 

* * * * * 

(v) Negative eligible retained income. 

Except as provided in paragraph 

(c)(1)(vi) of this section, a Boardregulated institution that is subject to 12 

CFR 225.8 or 238.170 may not make 

distributions or discretionary bonus 

payments during the current calendar 

quarter if, as of the end of the previous 


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calendar quarter, the Board-regulated 

institution’s: 

* * * * * 

(vi) Prior approval. Notwithstanding 

the limitations in paragraphs (c)(1)(i) 

through (v) of this section, the Board 

may permit a Board-regulated 

institution that is subject to 12 CFR 

225.8 or 238.170 to make a distribution 

or discretionary bonus payment upon a 

request of the Board-regulated 

institution, if the Board determines that 

the distribution or discretionary bonus 

payment would not be contrary to the 

purposes of this section, or to the safety 

and soundness of the Board-regulated 

institution. In making such a 

determination, the Board will consider 

the nature and extent of the request and 

the particular circumstances giving rise 

to the request. 

(vii) Other limitations on 

distributions. Additional limitations on 

distributions may apply under 12 CFR 

225.4, 225.8, 238.170, 252.63, 252.165, 

and 263.202 to a Board-regulated 

institution that is subject to 12 CFR 

225.8 or 238.170. 

(2) Standardized approach capital 

conservation buffer. (i) The 

standardized approach capital 

conservation buffer for Board-regulated 

institutions subject to 12 CFR 225.8 or 

238.170 is composed solely of common 

equity tier 1 capital. 

(ii) A Board-regulated institution that 

is subject to 12 CFR 225.8 or 238.170 

has a standardized approach capital 

conservation buffer that is equal to the 

lowest of the following ratios, calculated 

as of the last day of the previous 

calendar quarter: 

* * * * * 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

■ 3. 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 

■ 4. Amend § 225.8 by: 

■ a. Revising paragraphs (c)(1) and (2) 

and (d)(3) through (21); 

■ b. Removing paragraph (d)(22), 

■ c. Revising paragraphs (e)(2)(i)(A) and 

(e)(4)(i)(B)(3); 

■ d. Removing paragraph (e)(4)(i)(B)(4); 

■ e. Revising paragraphs (e)(4)(ii) and 

(iii); 

■ f. Removing paragraph (e)(4)(iv); 

■ g. Revising paragraph (f)(1); 

■ h. Adding paragraph (f)(4); 

■ i. Revising paragraphs (h)(2) through 

(5), (i), (j), and (k); and 

■ j. Removing paragraph (l). 

The revisions and additions read as 

follows: 

§ 225.8 Capital planning and stress capital 

buffer requirement. 

* * * * * 

(c) * * * 

(1) A bank holding company that 

meets the $100 billion asset threshold 

(as measured under paragraph (b) of this 

section) on or before September 30 of a 

calendar year must comply with the 

requirements of this section beginning 

on January 1 of the next calendar year, 

unless that time is extended by the 

Board in writing. Notwithstanding the 

previous sentence, the Board will not 

provide a bank holding company with 

notice of its stress capital buffer 

requirement until the first year in which 

the Board conducts an analysis of the 

bank holding company pursuant to 12 

CFR 252.44. 

(2) A bank holding company that 

meets the $100 billion asset threshold 

after September 30 of a calendar year 

must comply with the requirements of 

this section beginning on January 1 of 

the second calendar year after the bank 

holding company meets the $100 billion 

asset threshold, unless that time is 

extended by the Board in writing. 

Notwithstanding the previous sentence, 

the Board will not provide a bank 

holding company with notice of its 

stress capital buffer requirement until 

the first year in which the Board 

conducts an analysis of the bank 

holding company pursuant to 12 CFR 

252.44. 

* * * * * 

(d) * * * 

(3) 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. 

(4) 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. 

(5) 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 (e)(2) of this section. 

(6) Capital plan cycle means the 

period beginning on January 1 of a 

calendar year and ending on December 

31 of that year. 

(7) Capital policy means a bank 

holding company’s written principles 

and guidelines used for capital 

planning, capital issuance, capital usage 

and distributions, including internal 

capital goals; the quantitative or 

qualitative guidelines for capital 

distributions; the strategies for 

addressing potential capital shortfalls; 

and the internal governance procedures 

around capital policy principles and 

guidelines. 

(8) Category IV bank holding 

company means any bank holding 

company or U.S. intermediate holding 

company subject to this section that, as 

of December 31 of the prior capital plan 

cycle, is a Category IV banking 

organization pursuant to 12 CFR 252.5. 

(9) Common equity tier 1 capital has 

the same meaning as under 12 CFR part 

217. 

(10) Effective capital distribution 

limitations means any limitations on 

capital distributions established by the 

Board by order or regulation, including 

pursuant to 12 CFR 217.11, 225.4, 

252.63, 252.165, and 263.202, provided 

that, for any limitations based on riskweighted assets, such limitations must 

be calculated using the standardized 

approach, as set forth in 12 CFR part 

217, subpart D. 

(11) Final planned capital 

distributions means the planned capital 

distributions included in a capital plan 

that include the adjustments made 

pursuant to paragraph (h) of this 

section, if any. 

(12) GSIB surcharge has the same 

meaning as under 12 CFR 217.403. 

(13) Internal baseline scenario means 

a scenario that reflects the bank holding 

company’s expectation of the economic 

and financial outlook, including 

expectations related to the bank holding 

company’s capital adequacy and 

financial condition. 

(14) Internal stress scenario means a 

scenario designed by a bank holding 

company that stresses the specific 

vulnerabilities of the bank holding 

company’s risk profile and operations, 

including those related to the bank 

holding company’s capital adequacy 

and financial condition. 

(15) Nonbank financial company 

supervised by the Board means a 

company that the Financial Stability 

Oversight Council has determined 

under section 113 of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (12 U.S.C. 5323) shall be 

supervised by the Board and for which 

such determination is still in effect. 


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(16) Planning horizon means the 

period of at least nine consecutive 

quarters, beginning with the quarter 

preceding the quarter in which the bank 

holding company submits its capital 

plan, over which the relevant 

projections extend. 

(17) Regulatory capital ratio means a 

capital ratio for which the Board has 

established minimum requirements for 

the bank holding company by regulation 

or order, including, as applicable, the 

bank holding company’s regulatory 

capital ratios calculated under 12 CFR 

part 217 and the deductions required 

under 12 CFR 248.12; except that the 

bank holding company shall not use the 

advanced approaches to calculate its 

regulatory capital ratios. 

(18) Severely adverse scenario has the 

same meaning as under 12 CFR part 

252, subpart E. 

(19) Stress capital buffer requirement 

means the amount calculated under 

paragraph (f) of this section. 

(20) Supervisory stress test means a 

stress test conducted using a severely 

adverse scenario and the assumptions 

contained in 12 CFR part 252, subpart 

E. 

(21) U.S. intermediate holding 

company means the top-tier U.S. 

company that is required to be 

established pursuant to 12 CFR 252.153. 

(e) * * * 

(2) * * * 

(i) * * * 

(A) Estimates of projected revenues, 

losses, reserves, and pro forma capital 

levels, including regulatory capital 

ratios, and any additional capital 

measures deemed relevant by the bank 

holding company, over the planning 

horizon under a range of scenarios, 

including: 

(1) If the bank holding company is a 

Category IV bank holding company, the 

Internal baseline scenario and at least 

one Internal stress scenario, as well as 

any additional scenarios, based on 

financial conditions or the 

macroeconomic outlook, or based on the 

bank holding company’s financial 

condition, size, complexity, risk profile, 

or activities, or risks to the U.S. 

economy, that the Federal Reserve may 

provide the bank holding company after 

giving notice to the bank holding 

company; or 

(2) If the bank holding company is not 

a Category IV bank holding company, 

any scenarios provided by the Federal 

Reserve, the Internal baseline scenario, 

and at least one Internal stress scenario; 

* * * * * 

(4) * * * 

(i) * * * 

(B) * * * 

(3) The Internal stress scenario(s) are 

not appropriate for the bank holding 

company’s 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 

* * * * * 

(ii) The Board, or the appropriate 

Reserve Bank with concurrence of the 

Board, may extend the 30-day period in 

paragraph (e)(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. 

* * * * * 

(f) * * * 

(1) General. The Board will determine 

the stress capital buffer requirement that 

applies under 12 CFR 217.11 pursuant 

to this paragraph (f). For each bank 

holding company that is not a Category 

IV bank holding company, the Board 

will calculate the bank holding 

company’s stress capital buffer 

requirement annually. For each 

Category IV bank holding company, the 

Board will calculate the bank holding 

company’s stress capital buffer 

requirement biennially, occurring in 

each calendar year ending in an even 

number, and will adjust the bank 

holding company’s stress capital buffer 

requirement biennially, occurring in 

each calendar year ending in an odd 

number. Notwithstanding the previous 

sentence, the Board will calculate the 

stress capital buffer requirement of a 

Category IV bank holding company in a 

year ending in an odd number with 

respect to which that company makes 

an election pursuant to 12 CFR 

252.44(d)(2)(ii). 

* * * * * 

(4) Adjustment of stress capital buffer 

requirement. In each calendar year in 

which the Board does not calculate a 

Category IV bank holding company’s 

stress capital buffer requirement 

pursuant to paragraph (f)(1) of this 

section, the Board will adjust the 

Category IV bank holding company’s 

stress capital buffer requirement to be 

equal to the result of the calculation set 

forth in paragraph (f)(2) of this section, 

using the same values that were used to 

calculate the stress capital buffer 

requirement most recently provided to 

the bank holding company, except that 

the value used in paragraph 

(f)(2)(i)(C)(1) of this section will be 

equal to the bank holding company’s 

planned common stock dividends 

(expressed as a dollar amount) for each 

of the fourth through seventh quarters of 

the planning horizon as set forth in the 

capital plan submitted by the bank 

holding company in the calendar year in 

which the Board adjusts the bank 

holding company’s stress capital buffer 

requirement. 

(h) * * * 

(2) Response to notice—(i) Request for 

reconsideration of stress capital buffer 

requirement. A bank holding company 

may request reconsideration of a stress 

capital buffer requirement provided 

under paragraph (h)(1) of this section. 

To request reconsideration of a stress 

capital buffer requirement, a bank 

holding company must submit to the 

Board a request pursuant to paragraph 

(i) of this section. 

(ii) Adjustments to planned capital 

distributions. Within two business days 

of receipt of notice of a stress capital 

buffer requirement under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable, a bank holding company 

must: 

(A) Determine whether the planned 

capital distributions for the fourth 

through seventh quarters of the 

planning horizon under the Internal 

baseline scenario would be consistent 

with effective capital distribution 

limitations assuming the stress capital 

buffer requirement provided by the 

Board under paragraph (h)(1) or (i)(5) of 

this section, as applicable, in place of 

any stress capital buffer requirement in 

effect; and 

(1) If the planned capital distributions 

for the fourth through seventh quarters 

of the planning horizon under the 

Internal baseline scenario would not be 

consistent with effective capital 

distribution limitations assuming the 

stress capital buffer requirement 

provided by the Board under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable, in place of any stress capital 

buffer requirement in effect, the bank 

holding company must adjust its 

planned capital distributions such that 

its planned capital distributions would 

be consistent with effective capital 

distribution limitations assuming the 

stress capital buffer requirement 

provided by the Board under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable, in place of any stress capital 

buffer requirement in effect; or 

(2) If the planned capital distributions 

for the fourth through seventh quarters 


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of the planning horizon under the 

Internal baseline scenario would be 

consistent with effective capital 

distribution limitations assuming the 

stress capital buffer requirement 

provided by the Board under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable, in place of any stress capital 

buffer requirement in effect, the bank 

holding company may adjust its 

planned capital distributions. A bank 

holding company may not adjust its 

planned capital distributions to be 

inconsistent with the effective capital 

distribution limitations assuming the 

stress capital buffer requirement 

provided by the Board under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable; and 

(B) Notify the Board of any 

adjustments made to planned capital 

distributions for the fourth through 

seventh quarters of the planning horizon 

under the Internal baseline scenario. 

(3) Final planned capital 

distributions. The Board will consider 

the planned capital distributions, 

including any adjustments made 

pursuant to paragraph (h)(2)(ii) of this 

section, to be the bank holding 

company’s final planned capital 

distributions on the later of: 

(i) The expiration of the time for 

requesting reconsideration under 

paragraph (i) of this section; and 

(ii) The expiration of the time for 

adjusting planned capital distributions 

pursuant to paragraph (h)(2)(ii) of this 

section. 

(4) Effective date of final stress capital 

buffer requirement. (i) The Board will 

provide a bank holding company with 

its final stress capital buffer requirement 

and confirmation of the bank holding 

company’s final planned capital 

distributions by August 31 of the 

calendar year that a capital plan was 

submitted pursuant to paragraph 

(e)(1)(ii) of this section, unless 

otherwise determined by the Board. A 

stress capital buffer requirement will 

not be considered final so as to be 

agency action subject to judicial review 

under 5 U.S.C. 704 during the pendency 

of a request for reconsideration made 

pursuant to paragraph (i) of this section 

or before the time for requesting 

reconsideration has expired. 

(ii) Unless otherwise determined by 

the Board, a bank holding company’s 

final planned capital distributions and 

final stress capital buffer requirement 

shall: 

(A) Be effective on October 1 of the 

calendar year in which a capital plan 

was submitted pursuant to paragraph 

(e)(1)(ii) of this section; and 

(B) Remain in effect until superseded. 

(5) Publication. With respect to any 

bank holding company subject to this 

section, the Board may disclose publicly 

any or all of the following: 

(i) The stress capital buffer 

requirement provided to a bank holding 

company under paragraph (h)(1) or (i)(5) 

of this section; 

(ii) Adjustments made pursuant to 

paragraph (h)(2)(ii); 

(iii) A summary of the results of the 

supervisory stress test; and 

(iv) Other information. 

(i) Administrative remedies; request 

for reconsideration. The following 

requirements and procedures apply to 

any request under this paragraph (i): 

(1) General. To request 

reconsideration of a stress capital buffer 

requirement, provided under paragraph 

(h) of this section, a bank holding 

company must submit a written request 

for reconsideration. 

(2) Timing of request. A request for 

reconsideration of a stress capital buffer 

requirement, provided under paragraph 

(h) of this section, must be received 

within 15 calendar days of receipt of a 

notice of a bank holding company’s 

stress capital buffer requirement. 

(3) Contents of request. (i) A request 

for reconsideration must include a 

detailed explanation of why 

reconsideration should be granted (that 

is, why a stress capital buffer 

requirement should be reconsidered). 

With respect to any information that 

was not previously provided to the 

Federal Reserve in the bank holding 

company’s capital plan, the request 

should include an explanation of why 

the information should be considered. 

(ii) A request for reconsideration may 

include a request for an informal 

hearing on the bank holding company’s 

request for reconsideration. 

(4) Hearing. (i) The Board may, in its 

sole discretion, order an informal 

hearing if the Board finds that a hearing 

is appropriate or necessary to resolve 

disputes regarding material issues of 

fact. 

(ii) An informal hearing shall be held 

within 30 calendar days of a request, if 

granted, provided that the Board may 

extend this period upon notice to the 

requesting party. 

(5) Response to request. Within 30 

calendar days of receipt of the bank 

holding company’s request for 

reconsideration of its stress capital 

buffer requirement submitted under 

paragraph (i)(2) of this section or within 

30 days of the conclusion of an informal 

hearing conducted under paragraph 

(i)(4) of this section, the Board will 

notify the company of its decision to 

affirm or modify the bank holding 

company’s stress capital buffer 

requirement, provided that the Board 

may extend this period upon notice to 

the bank holding company. 

(6) Distributions during the pendency 

of a request for reconsideration. During 

the pendency of the Board’s decision 

under paragraph (i)(5) of this section, 

the bank holding company may make 

capital distributions that are consistent 

with effective distribution limitations, 

unless prior approval is required under 

paragraph (j)(1) of this section. 

(j) Approval requirements for certain 

capital actions—(1) Circumstances 

requiring approval—Resubmission of a 

capital plan. Unless it receives prior 

approval pursuant to paragraph (j)(3) of 

this section, a bank holding company 

may not make a capital distribution 

(excluding any capital distribution 

arising from the issuance of a capital 

instrument eligible for inclusion in the 

numerator of a regulatory capital ratio) 

if the capital distribution would occur 

after the occurrence of an event 

requiring resubmission under paragraph 

(e)(4)(i)(A) or (B) of this section. 

(2) Contents of request. A request for 

a capital distribution under this section 

must contain the following information: 

(i) The bank holding company’s 

capital plan or a discussion of changes 

to the bank holding company’s capital 

plan since it was last submitted to the 

Federal Reserve; 

(ii) The purpose of the transaction; 

(iii) 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 

(iv) 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 

severely adverse scenario, a revised 

capital plan, and supporting data). 

(3) Approval of certain capital 

distributions. (i) The Board, or the 

appropriate Reserve Bank with 

concurrence of the Board, will act on a 

request for prior approval of a capital 

distribution within 30 calendar days 

after the receipt of all the information 

required under paragraph (j)(2) of this 

section. 

(ii) In acting on a request for prior 

approval of a capital distribution, the 

Board, or appropriate Reserve Bank with 

concurrence of the Board, will apply the 

considerations and principles in 

paragraph (g) of this section, as 

appropriate. In addition, the Board, or 

the appropriate Reserve Bank with 

concurrence of the Board, may 


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disapprove the transaction if the bank 

holding company does not provide all of 

the information required to be 

submitted under paragraph (j)(2) of this 

section. 

(4) Disapproval and hearing. (i) 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 

disapprove any proposed capital 

distribution. Within 15 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 may, in its sole 

discretion, order an informal hearing if 

the Board finds that a hearing is 

appropriate or necessary to resolve 

disputes regarding material issues of 

fact. An informal hearing shall be held 

within 30 calendar days of a request, if 

granted, provided that the Board may 

extend this period upon notice to the 

requesting party. 

(iii) Written notice of the final 

decision of the Board shall be given to 

the bank holding company within 60 

calendar days of the conclusion of any 

informal hearing ordered by the Board, 

provided that the Board may extend this 

period upon notice to the requesting 

party. 

(iv) While the Board’s decision is 

pending and until such time as the 

Board, or the appropriate Reserve Bank 

with concurrence of the Board, approves 

the capital distribution at issue, the 

bank holding company may not make 

such capital distribution. 

(k) Post notice requirement. A bank 

holding company must notify the Board 

and the appropriate Reserve Bank 

within 15 days of making a capital 

distribution if: 

(1) The capital distribution was 

approved pursuant to paragraph (j)(3) of 

this section; or 

(2) The dollar amount of the capital 

distribution will exceed the dollar 

amount of the bank holding company’s 

final planned capital distributions, as 

measured on an aggregate basis 

beginning in the fourth quarter of the 

planning horizon through the quarter at 

issue. 

PART 238—SAVINGS AND LOAN 

HOLDING COMPANIES (REGULATION 

LL) 

■ 5. The authority citation for part 238 

continues to read as follows: 

Authority: 5 U.S.C. 552, 559; 12 U.S.C. 

1462, 1462a, 1463, 1464, 1467, 1467a, 1468, 

5365; 1813, 1817, 1829e, 1831i, 1972, 15 

U.S.C. 78l. 

Subpart O—Supervisory Stress Test 

Requirements for Covered Savings 

and Loan Holding Companies 

■ 6. Amend § 238.132 by adding 

paragraph (a)(4), revising paragraph 

(c)(2), and adding paragraph (d) to read 

as follows: 

§ 238.132 Analysis conducted by the 

Board. 

(a) * * * 

(4) In conducting the analysis, the 

Board will not incorporate changes to a 

firm’s business plan that are likely to 

have a material impact on the covered 

company’s capital adequacy and 

funding profile in its projections of 

losses, net income, pro forma capital 

levels, and capital ratios. 

* * * * * 

(c) * * * 

(2) Change in frequency. (i) The Board 

may conduct a stress test of a covered 

company on a more or less frequent 

basis than would be required under 

paragraph (c)(1) of 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. 

(ii) A Category IV savings and loan 

holding company may elect to have the 

Board conduct a stress test with respect 

to the company in a year ending in an 

odd number by providing notice to the 

Board and the appropriate Federal 

Reserve Bank by January 15 of that year. 

* * * * * 

(d) Capital Action Assumptions. In 

conducting a stress test under this 

section, the Board will make the 

following assumptions regarding a 

covered company’s capital actions over 

the planning horizon: 

(1) The covered company will not pay 

any dividends on any instruments that 

qualify as common equity tier 1 capital; 

(2) The covered company will make 

payments on instruments that qualify as 

additional tier 1 capital or tier 2 capital 

equal to the stated dividend, interest, or 

principal due on such instrument; 

(3) The covered company will not 

make a redemption or repurchase of any 

capital instrument that is eligible for 

inclusion in the numerator of a 

regulatory capital ratio; and 

(4) The covered company will not 

make any issuances of common stock or 

preferred stock. 

Subpart P—Company-Run Stress Test 

Requirements for Savings and Loan 

Holding Companies 

■ 7. Amend § 238.144 by revising 

paragraphs (a)(2) and (b)(1) and (2) and 

adding paragraphs (b)(3) and (4) to read 

as follows: 

§ 238.144 Methodologies and practices. 

(a) * * * 

(2) The potential impact on pro forma 

regulatory capital levels and pro forma 

capital ratios (including regulatory 

capital ratios and any other capital 

ratios specified by the Board), and in so 

doing must: 

(i) Incorporate the effects of any 

capital actions over the planning 

horizon and maintenance of an 

allowance for credit losses appropriate 

for credit exposures throughout the 

planning horizon; and 

(ii) Exclude the impacts of changes to 

a firm’s business plan that are likely to 

have a material impact on the covered 

company’s capital adequacy and 

funding profile. 

(b) * * * 

(1) The covered company will not pay 

any dividends on any instruments that 

qualify as common equity tier 1 capital; 

(2) The covered company will make 

payments on instruments that qualify as 

additional tier 1 capital or tier 2 capital 

equal to the stated dividend, interest, or 

principal due on such instrument; 

(3) The covered company will not 

make a redemption or repurchase of any 

capital instrument that is eligible for 

inclusion in the numerator of a 

regulatory capital ratio; and 

(4) The covered company will not 

make any issuances of common stock or 

preferred stock. 

* * * * * 

■ 8. Amend § 238.146 by revising 

paragraph (a)(1) to read as follows: 

§ 238.146 Disclosure of stress test results. 

(a) Public disclosure of results—(1) In 

general. (i) A covered company that is 

subject to a supervisory stress test under 

12 CFR 238.132 must publicly disclose 

a summary of the results of the stress 

test required under § 238.143 within the 

period that is 15 calendar days after the 

Board publicly discloses the results of 

its supervisory stress test of the covered 

company pursuant to § 238.134, unless 

that time is extended by the Board in 

writing; and 

(ii) A covered company that is not 

subject to a supervisory stress test under 

§ 238.132 must publicly disclose a 

summary of the results of the stress test 

required under § 238.143 in the period 

beginning on June 15 and ending on 

June 30 in the year in which the stress 

test is conducted, unless that time is 

extended by the Board in writing. 

* * * * * 

■ 9. Add Subpart S, consisting of 

§ 238.170, to read as follows: 


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Subpart S—Capital Planning and 

Stress Capital Buffer Requirement 

§ 238.170 Capital planning and stress 

capital buffer requirement. 

(a) Purpose. This section establishes 

capital planning and prior notice and 

approval requirements for capital 

distributions by certain savings and loan 

holding companies. This section also 

establishes the Board’s process for 

determining the stress capital buffer 

requirement applicable to these savings 

and loan holding companies. 

(b) Scope and reservation of 

authority—(1) Applicability. Except as 

provided in § 238.170(c), this section 

applies to: 

(i) Any top-tier covered savings and 

loan holding company domiciled in the 

United States with average total 

consolidated assets of $100 billion or 

more ($100 billion asset threshold); and 

(ii) Any other covered savings and 

loan holding company domiciled in the 

United States that is made subject to 

this section, in whole or in part, by 

order of the Board. 

(2) Average total consolidated assets. 

For purposes of this section, average 

total consolidated assets means the 

average of the total consolidated assets 

as reported by a covered savings and 

loan holding company on its 

Consolidated Financial Statements for 

Holding Companies (FR Y–9C) for the 

four most recent consecutive quarters. If 

the covered savings and loan 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, as applicable. 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. 

(3) Ongoing applicability. A covered 

savings and loan holding company 

(including any successor covered 

savings and loan holding company) that 

is subject to any requirement in this 

section shall remain subject to such 

requirements unless and until its total 

consolidated assets fall below $100 

billion for each of four consecutive 

quarters, as reported on the FR Y–9C 

and effective on the as-of date of the 

fourth consecutive FR Y–9C. 

(4) Reservation of authority. Nothing 

in this section shall limit the authority 

of the Federal Reserve to issue or 

enforce a capital directive or take any 

other supervisory or enforcement action, 

including an action to address unsafe or 

unsound practices or conditions or 

violations of law. 

(5) Application of this section by 

order. The Board may apply this 

section, in whole or in part, to a covered 

savings and loan holding company by 

order based on the institution’s size, 

level of complexity, risk profile, scope 

of operations, or financial condition. 

(c) Transition periods for certain 

covered savings and loan holding 

companies. (1) A covered savings and 

loan holding company that meets the 

$100 billion asset threshold (as 

measured under paragraph (b) of this 

section) on or before September 30 of a 

calendar year must comply with the 

requirements of this section beginning 

on January 1 of the next calendar year, 

unless that time is extended by the 

Board in writing. Notwithstanding the 

previous sentence, the Board will not 

provide a covered savings and loan 

holding company with notice of its 

stress capital buffer requirement until 

the first year in which the Board 

conducts an analysis of the covered 

savings and loan company pursuant to 

12 CFR 238.132. 

(2) A covered savings and loan 

holding company that meets the $100 

billion asset threshold after September 

30 of a calendar year must comply with 

the requirements of this section 

beginning on January 1 of the second 

calendar year after the covered savings 

and loan holding company meets the 

$100 billion asset threshold, unless that 

time is extended by the Board in 

writing. Notwithstanding the previous 

sentence, the Board will not provide a 

covered savings and loan holding 

company with notice of its stress capital 

buffer requirement until the first year in 

which the Board conducts an analysis of 

the covered savings and loan holding 

company pursuant to 12 CFR 238.132. 

(3) The Board, or the appropriate 

Reserve Bank with the concurrence of 

the Board, may require a covered 

savings and loan holding company 

described in paragraph (c)(1) or (2) of 

this section to comply with any or all 

of the requirements of this section if the 

Board, or appropriate Reserve Bank with 

concurrence of the Board, determines 

that the requirement is appropriate on a 

different date based on the company’s 

risk profile, scope of operation, or 

financial condition and provides prior 

notice to the company of the 

determination. 

(d) Definitions. For purposes of this 

section, the following definitions apply: 

(1) Advanced approaches means the 

risk-weighted assets calculation 

methodologies at 12 CFR part 217, 

subpart E, as applicable. 

(2) Average total nonbank assets 

means the average of the total nonbank 

assets, calculated in accordance with 

the instructions to the FR Y–9LP, for the 

four most recent calendar quarters or, if 

the covered savings and loan holding 

company has not filed the FR Y–9LP for 

each of the four most recent calendar 

quarters, for the most recent quarter or 

quarters, as applicable. 

(3) 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 covered 

savings and loan holding company’s 

consolidated capital. 

(4) 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. 

(5) Capital plan means a written 

presentation of a covered savings and 

loan holding company’s capital 

planning strategies and capital adequacy 

process that includes the mandatory 

elements set forth in paragraph (e)(2) of 

this section. 

(6) Capital plan cycle means the 

period beginning on January 1 of a 

calendar year and ending on December 

31 of that year. 

(7) Capital policy means a covered 

savings and loan holding company’s 

written principles and guidelines used 

for capital planning, capital issuance, 

capital usage and distributions, 

including internal capital goals; the 

quantitative or qualitative guidelines for 

capital distributions; the strategies for 

addressing potential capital shortfalls; 

and the internal governance procedures 

around capital policy principles and 

guidelines. 

(8) Category IV savings and loan 

holding company means a covered 

savings and loan holding company 

identified as a Category IV banking 

organization pursuant to 12 CFR 238.10. 

(9) Common equity tier 1 capital has 

the same meaning as under 12 CFR part 

217. 

(10) Effective capital distribution 

limitations means any limitations on 

capital distributions established by the 

Board by order or regulation, including 

pursuant to 12 CFR 217.11, provided 

that, for any limitations based on riskweighted assets, such limitations must 

be calculated using the standardized 

approach, as set forth in 12 CFR part 

217, subpart D. 

(11) Final planned capital 

distributions means the planned capital 


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distributions included in a capital plan 

that include the adjustments made 

pursuant to paragraph (h) of this 

section, if any. 

(12) Internal baseline scenario means 

a scenario that reflects the covered 

savings and loan holding company’s 

expectation of the economic and 

financial outlook, including 

expectations related to the covered 

saving and loan holding company’s 

capital adequacy and financial 

condition. 

(13) Internal stress scenario means a 

scenario designed by a covered savings 

and loan holding company that stresses 

the specific vulnerabilities of the 

covered savings and loan holding 

company’s risk profile and operations, 

including those related to the covered 

savings and loan holding company’s 

capital adequacy and financial 

condition. 

(14) Planning horizon means the 

period of at least nine consecutive 

quarters, beginning with the quarter 

preceding the quarter in which the 

covered savings and loan holding 

company submits its capital plan, over 

which the relevant projections extend. 

(15) Regulatory capital ratio means a 

capital ratio for which the Board has 

established minimum requirements for 

the covered savings and loan holding 

company by regulation or order, 

including, as applicable, the covered 

savings and loan holding company’s 

regulatory capital ratios calculated 

under 12 CFR part 217 and the 

deductions required under 12 CFR 

248.12; except that the covered savings 

and loan holding company shall not use 

the advanced approaches to calculate its 

regulatory capital ratios. 

(16) 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 

significantly more severe than those 

associated with the baseline scenario 

and may include trading or other 

additional components. 

(17) Stress capital buffer requirement 

means the amount calculated under 

paragraph (f) of this section. 

(18) Supervisory stress test means a 

stress test conducted using a severely 

adverse scenario and the assumptions 

contained in 12 CFR part 238, subpart 

O. 

(e) Capital planning requirements and 

procedures—(1) Annual capital 

planning. (i) A covered savings and loan 

holding company must develop and 

maintain a capital plan. 

(ii) A covered savings and loan 

holding company must submit its 

complete capital plan to the Board and 

the appropriate Reserve Bank by April 

5 of each calendar year, or such later 

date as directed by the Board or by the 

appropriate Reserve Bank with 

concurrence of the Board. 

(iii) The covered savings and loan 

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 

(e)(1)(ii) of this section: 

(A) Review the robustness of the 

covered savings and loan holding 

company’s process for assessing capital 

adequacy; 

(B) Ensure that any deficiencies in the 

covered savings and loan holding 

company’s process for assessing capital 

adequacy are appropriately remedied; 

and 

(C) Approve the covered savings and 

loan 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 covered savings 

and loan 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 regulatory capital 

ratios, and any additional capital 

measures deemed relevant by the 

covered savings and loan holding 

company, over the planning horizon 

under a range of scenarios, including: 

(1) If the covered savings and loan 

holding company is a Category IV 

savings and loan holding company, the 

Internal baseline scenario and at least 

one Internal stress scenario, as well as 

any additional scenarios, based on 

financial conditions or the 

macroeconomic outlook, or based on the 

covered savings and loan holding 

company’s financial condition, size, 

complexity, risk profile, or activities, or 

risks to the U.S. economy, that the 

Federal Reserve may provide the 

covered savings and loan holding 

company after giving notice to the 

covered savings and loan holding 

company; or 

(2) If the covered savings and loan 

holding company is not a Category IV 

savings and loan holding company, any 

scenarios provided by the Federal 

Reserve, the Internal baseline scenario, 

and at least one Internal stress scenario; 

(B) 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 

(C) A description of all planned 

capital actions over the planning 

horizon. Planned capital actions must 

be consistent with effective capital 

distribution limitations, except as may 

be adjusted pursuant to paragraph (h) of 

this section. In determining whether a 

covered savings and loan holding 

company’s planned capital distributions 

are consistent with effective capital 

distribution limitations, a covered 

savings and loan holding company must 

assume that any countercyclical capital 

buffer amount currently applicable to 

the covered savings and loan holding 

company remains at the same level, 

except that the covered savings and loan 

holding company must reflect any 

increases or decreases in the 

countercyclical capital buffer amount 

that have been announced by the Board 

at the times indicated by the Board’s 

announcement for when such increases 

or decreases will take effect. 

(ii) A detailed description of the 

covered savings and loan holding 

company’s process for assessing capital 

adequacy, including: 

(A) A discussion of how the covered 

savings and loan holding company will, 

under expected and stressful conditions, 

maintain capital commensurate with its 

risks, maintain capital above the 

regulatory capital ratios, and serve as a 

source of strength to its subsidiary 

depository institutions; 

(B) A discussion of how the covered 

savings and loan 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 covered savings and loan 

holding company’s capital policy; and 

(iv) A discussion of any expected 

changes to the covered savings and loan 

holding company’s business plan that 

are likely to have a material impact on 

the covered savings and loan holding 

company’s capital adequacy or 

liquidity. 

(3) Data collection. Upon the request 

of the Board or appropriate Reserve 

Bank, the covered savings and loan 

holding company shall provide the 

Federal Reserve with information 

regarding: 

(i) The covered savings and loan 

holding company’s financial condition, 

including its capital; 

(ii) The covered savings and loan 

holding company’s structure; 

(iii) Amount and risk characteristics 

of the covered savings and loan holding 

company’s on- and off-balance sheet 

exposures, including exposures within 

the covered savings and loan holding 

company’s trading account, other 


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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 covered savings and loan 

holding company’s relevant policies and 

procedures, including risk management 

policies and procedures; 

(v) The covered savings and loan 

holding company’s liquidity profile and 

management; 

(vi) The loss, revenue, and expense 

estimation models used by the covered 

savings and loan holding company for 

stress scenario analysis, including 

supporting documentation regarding 

each model’s development and 

validation; and 

(vii) Any other relevant qualitative or 

quantitative information requested by 

the Board or by the appropriate Reserve 

Bank to facilitate review of the covered 

savings and loan holding company’s 

capital plan under this section. 

(4) Resubmission of a capital plan. (i) 

A covered savings and loan holding 

company must update and resubmit its 

capital plan to the appropriate Reserve 

Bank within 30 calendar days of the 

occurrence of one of the following 

events: 

(A) The covered savings and loan 

holding company determines there has 

been or will be a material change in the 

covered savings and loan holding 

company’s risk profile, financial 

condition, or corporate structure since 

the covered savings and loan holding 

company last submitted the capital plan 

to the Board and the appropriate 

Reserve Bank under this section; or 

(B) The Board, or the appropriate 

Reserve Bank with concurrence of the 

Board, directs the covered savings and 

loan 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 covered savings 

and loan holding company’s internal 

capital adequacy process, contains 

material weaknesses; 

(2) There has been, or will likely be, 

a material change in the covered savings 

and loan holding company’s risk profile 

(including a material change in its 

business strategy or any risk exposure), 

financial condition, or corporate 

structure; 

(3) The Internal stress scenario(s) are 

not appropriate for the covered savings 

and loan holding company’s business 

model and portfolios, or changes in 

financial markets or the macroeconomic outlook that could have a 

material impact on a covered savings 

and loan holding company’s risk profile 

and financial condition require the use 

of updated scenarios; or 

(ii) The Board, or the appropriate 

Reserve Bank with concurrence of the 

Board, may extend the 30-day period in 

paragraph (e)(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 covered savings and 

loan 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. 

(5) Confidential treatment of 

information submitted. The 

confidentiality of information submitted 

to the Board under this section 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). 

(f) Calculation of the stress capital 

buffer requirement—(1) General. The 

Board will determine the stress capital 

buffer requirement that applies under 12 

CFR 217.11 pursuant to paragraph (f) of 

this section. For each covered savings 

and loan holding company that is not a 

Category IV savings and loan holding 

company, the Board will calculate the 

covered savings and loan holding 

company’s stress capital buffer 

requirement annually. For each 

Category IV savings and loan holding 

company, the Board will calculate the 

covered savings and loan holding 

company’s stress capital buffer 

requirement biennially, occurring in 

each calendar year ending in an even 

number, and will adjust the covered 

savings and loan holding company’s 

stress capital buffer requirement 

biennially, occurring in each calendar 

year ending in an odd number. 

Notwithstanding the previous sentence, 

the Board will calculate the stress 

capital buffer requirement of a Category 

IV savings and loan holding company in 

a year ending in an odd number with 

respect to which that company makes 

an election pursuant to 12 CFR 

238.132(c)(2)(ii). 

(2) Stress capital buffer requirement 

calculation. A covered savings and loan 

holding company’s stress capital buffer 

requirement is equal to the greater of: 

(i) The following calculation: 

(A) The ratio of a covered savings and 

loan holding company’s common equity 

tier 1 capital to risk-weighted assets, as 

calculated under 12 CFR part 217, 

subpart D, as of the final quarter of the 

previous capital plan cycle, unless 

otherwise determined by the Board; 

minus 

(B) The lowest projected ratio of the 

covered savings and loan holding 

company’s common equity tier 1 capital 

to risk-weighted assets, as calculated 

under 12 CFR part 217, subpart D, in 

any quarter of the planning horizon 

under a supervisory stress test; plus 

(C) The ratio of: 

(1) The sum of the covered savings 

and loan holding company’s planned 

common stock dividends (expressed as 

a dollar amount) for each of the fourth 

through seventh quarters of the 

planning horizon; to 

(2) The risk-weighted assets of the 

covered savings and loan holding 

company in the quarter in which the 

covered savings and loan holding 

company had its lowest projected ratio 

of common equity tier 1 capital to riskweighted assets, as calculated under 12 

CFR part 217, subpart D, in any quarter 

of the planning horizon under a 

supervisory stress test; and 

(ii) 2.5 percent. 

(3) Recalculation of stress capital 

buffer requirement. If a covered savings 

and loan holding company resubmits its 

capital plan pursuant to paragraph (e)(4) 

of this section, the Board may 

recalculate the covered savings and loan 

holding company’s stress capital buffer 

requirement. The Board will provide 

notice of whether the covered savings 

and loan holding company’s stress 

capital buffer requirement will be 

recalculated within 75 calendar days 

after the date on which the capital plan 

is resubmitted, unless the Board 

provides notice to the company that it 

is extending the time period. 

(4) Adjustment of stress capital buffer 

requirement. In each calendar year in 

which the Board does not calculate a 

Category IV savings and loan holding 

company’s stress capital buffer 

requirement pursuant to paragraph (f)(1) 

of this section, the Board will adjust the 

Category IV savings and loan holding 

company’s stress capital buffer 

requirement to be equal to the result of 

the calculation set forth in paragraph 

(f)(2) of this section, using the same 

values that were used to calculate the 

stress capital buffer requirement most 

recently provided to the covered savings 

and loan holding company, except that 

the value used in paragraph 

(f)(2)(i)(C)(1) of the calculation will be 

equal to the covered savings and loan 

holding company’s planned common 

stock dividends (expressed as a dollar 

amount) for each of the fourth through 

seventh quarters of the planning horizon 


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as set forth in the capital plan submitted 

by the covered savings and loan holding 

company in the calendar year in which 

the Board adjusts the covered savings 

and loan holding company’s stress 

capital buffer requirement. 

(g) Review of capital plans by the 

Federal Reserve. The Board, or the 

appropriate Reserve Bank with 

concurrence of the Board, will consider 

the following factors in reviewing a 

covered savings and loan holding 

company’s capital plan: 

(1) 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 covered savings and loan 

holding company and the covered 

savings and loan holding company’s 

capital policy; 

(2) The reasonableness of the covered 

savings and loan holding company’s 

capital plan, the assumptions and 

analysis underlying the capital plan, 

and the robustness of its capital 

adequacy process; 

(3) Relevant supervisory information 

about the covered savings and loan 

holding company and its subsidiaries; 

(4) The covered savings and loan 

holding company’s regulatory and 

financial reports, as well as supporting 

data that would allow for an analysis of 

the covered savings and loan holding 

company’s loss, revenue, and reserve 

projections; 

(5) The results of any stress tests 

conducted by the covered savings and 

loan holding company or the Federal 

Reserve; and 

(6) Other information requested or 

required by the Board or the appropriate 

Reserve Bank, as well as any other 

information relevant, or related, to the 

savings and loan holding company’s 

capital adequacy. 

(h) Federal Reserve notice of stress 

capital buffer requirement; final 

planned capital distributions—(1) 

Notice. The Board will provide a 

covered savings and loan holding 

company with notice of its stress capital 

buffer requirement and an explanation 

of the results of the supervisory stress 

test. Unless otherwise determined by 

the Board, notice will be provided by 

June 30 of the calendar year in which 

the capital plan was submitted pursuant 

to paragraph (e)(1)(ii) of this section or 

within 90 calendar days of receiving 

notice that the Board will recalculate 

the covered savings and loan holding 

company’s stress capital buffer 

requirement pursuant to paragraph (f)(3) 

of this section. 

(2) Response to notice—(i) Request for 

reconsideration of stress capital buffer 

requirement. A covered savings and 

loan holding company may request 

reconsideration of a stress capital buffer 

requirement provided under paragraph 

(h)(1) of this section. To request 

reconsideration of a stress capital buffer 

requirement, a covered savings and loan 

holding company must submit to the 

Board a request pursuant to paragraph 

(i) of this section. 

(ii) Adjustments to planned capital 

distributions. Within two business days 

of receipt of notice of a stress capital 

buffer requirement under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable, a covered savings and loan 

holding company must: 

(A) Determine whether the planned 

capital distributions for the fourth 

through seventh quarters of the 

planning horizon under the Internal 

baseline scenario would be consistent 

with effective capital distribution 

limitations assuming the stress capital 

buffer requirement provided by the 

Board under paragraph (h)(1) or (i)(5) of 

this section, as applicable, in place of 

any stress capital buffer requirement in 

effect; and 

(1) If the planned capital distributions 

for the fourth through seventh quarters 

of the planning horizon under the 

Internal baseline scenario would not be 

consistent with effective capital 

distribution limitations assuming the 

stress capital buffer requirement 

provided by the Board under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable, in place of any stress capital 

buffer requirement in effect, the covered 

savings and loan holding company must 

adjust its planned capital distributions 

such that its planned capital 

distributions would be consistent with 

effective capital distribution limitations 

assuming the stress capital buffer 

requirement provided by the Board 

under paragraph (h)(1) or (i)(5) of this 

section, as applicable, in place of any 

stress capital buffer requirement in 

effect; or 

(2) If the planned capital distributions 

for the fourth through seventh quarters 

of the planning horizon under the 

Internal baseline scenario would be 

consistent with effective capital 

distribution limitations assuming the 

stress capital buffer requirement 

provided by the Board under paragraph 

(h)(1) or (i)(5) of this section, as 

applicable, in place of any stress capital 

buffer requirement in effect, the covered 

savings and loan holding company may 

adjust its planned capital distributions. 

A covered savings and loan holding 

company may not adjust its planned 

capital distributions to be inconsistent 

with the effective capital distribution 

limitations assuming the stress capital 

buffer requirement provided by the 

Board under paragraph (h)(1) or (i)(5) of 

this section, as applicable; and 

(B) Notify the Board of any 

adjustments made to planned capital 

distributions for the fourth through 

seventh quarters of the planning horizon 

under the Internal baseline scenario. 

(3) Final planned capital 

distributions. The Board will consider 

the planned capital distributions, 

including any adjustments made 

pursuant to paragraph (h)(2)(ii) of this 

section, to be the covered savings and 

loan holding company’s final planned 

capital distributions on the later of: 

(i) The expiration of the time for 

requesting reconsideration under 

paragraph (i) of this section; and 

(ii) The expiration of the time for 

adjusting planned capital distributions 

pursuant to paragraph (h)(2)(ii) of this 

section. 

(4) Effective date of final stress capital 

buffer requirement. (i) The Board will 

provide a savings and loan holding 

company with its final stress capital 

buffer requirement and confirmation of 

the covered savings and loan holding 

company’s final planned capital 

distributions by August 31 of the 

calendar year that a capital plan was 

submitted pursuant to paragraph 

(e)(1)(ii) of this section, unless 

otherwise determined by the Board. A 

stress capital buffer requirement will 

not be considered final so as to be 

agency action subject to judicial review 

under 5 U.S.C. 704 during the pendency 

of a request for reconsideration made 

pursuant to paragraph (i) of this section 

or before the time for requesting 

reconsideration has expired. 

(ii) Unless otherwise determined by 

the Board, a covered savings and loan 

holding company’s final planned capital 

distributions and final stress capital 

buffer requirement shall: 

(A) Be effective on October 1 of the 

calendar year in which a capital plan 

was submitted pursuant to paragraph 

(e)(1)(ii) of this section; and 

(B) Remain in effect until superseded. 

(5) Publication. With respect to any 

covered savings and loan holding 

company subject to this section, the 

Board may disclose publicly any or all 

of the following: 

(i) The stress capital buffer 

requirement provided to a covered 

savings and loan holding company 

under paragraph (h)(1) or (i)(5) of this 

section; 

(ii) Adjustments made pursuant to 

paragraph (h)(2)(ii); 

(iii) A summary of the results of the 

supervisory stress test; and 

(iv) Other information. 


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(i) Administrative remedies; request 

for reconsideration. The following 

requirements and procedures apply to 

any request under this paragraph (i): 

(1) General. To request 

reconsideration of a stress capital buffer 

requirement, provided under paragraph 

(h) of this section, a covered savings and 

loan holding company must submit a 

written request for reconsideration. 

(2) Timing of request. A request for 

reconsideration of a stress capital buffer 

requirement, provided under paragraph 

(h) of this section, must be received 

within 15 calendar days of receipt of a 

notice of a covered savings and loan 

holding company’s stress capital buffer 

requirement. 

(3) Contents of request. (i) A request 

for reconsideration must include a 

detailed explanation of why 

reconsideration should be granted (that 

is, why a stress capital buffer 

requirement should be reconsidered). 

With respect to any information that 

was not previously provided to the 

Federal Reserve in the covered savings 

and loan holding company’s capital 

plan, the request should include an 

explanation of why the information 

should be considered. 

(ii) A request for reconsideration may 

include a request for an informal 

hearing on the covered savings and loan 

holding company’s request for 

reconsideration. 

(4) Hearing. (i) The Board may, in its 

sole discretion, order an informal 

hearing if the Board finds that a hearing 

is appropriate or necessary to resolve 

disputes regarding material issues of 

fact. 

(ii) An informal hearing shall be held 

within 30 calendar days of a request, if 

granted, provided that the Board may 

extend this period upon notice to the 

requesting party. 

(5) Response to request. Within 30 

calendar days of receipt of the covered 

savings and loan holding company’s 

request for reconsideration of its stress 

capital buffer requirement submitted 

under paragraph (i)(2) of this section or 

within 30 days of the conclusion of an 

informal hearing conducted under 

paragraph (i)(4) of this section, the 

Board will notify the company of its 

decision to affirm or modify the covered 

savings and loan holding company’s 

stress capital buffer requirement, 

provided that the Board may extend this 

period upon notice to the covered 

savings and loan holding company. 

(6) Distributions during the pendency 

of a request for reconsideration. During 

the pendency of the Board’s decision 

under paragraph (i)(5) of this section, 

the covered savings and loan holding 

company may make capital 

distributions that are consistent with 

effective distribution limitations, unless 

prior approval is required under 

paragraph (j)(1) of this section. 

(j) Approval requirements for certain 

capital actions—(1) Circumstances 

requiring approval—Resubmission of a 

capital plan. Unless it receives prior 

approval pursuant to paragraph (j)(3) of 

this section, a covered savings and loan 

holding company may not make a 

capital distribution (excluding any 

capital distribution arising from the 

issuance of a capital instrument eligible 

for inclusion in the numerator of a 

regulatory capital ratio) if the capital 

distribution would occur after the 

occurrence of an event requiring 

resubmission under paragraph 

(e)(4)(i)(A) or (B) of this section. 

(2) Contents of request. A request for 

a capital distribution under this section 

must contain the following information: 

(i) The covered savings and loan 

holding company’s capital plan or a 

discussion of changes to the covered 

savings and loan holding company’s 

capital plan since it was last submitted 

to the Federal Reserve; 

(ii) The purpose of the transaction; 

(iii) 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 

(iv) Any additional information 

requested by the Board or the 

appropriate Reserve Bank (which may 

include, among other things, an 

assessment of the covered savings and 

loan holding company’s capital 

adequacy under a severely adverse 

scenario, a revised capital plan, and 

supporting data). 

(3) Approval of certain capital 

distributions. (i) The Board, or the 

appropriate Reserve Bank with 

concurrence of the Board, will act on a 

request for prior approval of a capital 

distribution within 30 calendar days 

after the receipt of all the information 

required under paragraph (j)(2) of this 

section. 

(ii) In acting on a request for prior 

approval of a capital distribution, the 

Board, or appropriate Reserve Bank with 

concurrence of the Board, will apply the 

considerations and principles in 

paragraph (g) of this section, as 

appropriate. In addition, the Board, or 

the appropriate Reserve Bank with 

concurrence of the Board, may 

disapprove the transaction if the 

covered savings and loan holding 

company does not provide all of the 

information required to be submitted 

under paragraph (j)(2) of this section. 

(4) Disapproval and hearing. (i) The 

Board, or the appropriate Reserve Bank 

with concurrence of the Board, will 

notify the covered savings and loan 

holding company in writing of the 

reasons for a decision to disapprove any 

proposed capital distribution. Within 15 

calendar days after receipt of a 

disapproval by the Board, the covered 

savings and loan holding company may 

submit a written request for a hearing. 

(ii) The Board may, in its sole 

discretion, order an informal hearing if 

the Board finds that a hearing is 

appropriate or necessary to resolve 

disputes regarding material issues of 

fact. An informal hearing shall be held 

within 30 calendar days of a request, if 

granted, provided that the Board may 

extend this period upon notice to the 

requesting party. 

(iii) Written notice of the final 

decision of the Board shall be given to 

the covered savings and loan holding 

company within 60 calendar days of the 

conclusion of any informal hearing 

ordered by the Board, provided that the 

Board may extend this period upon 

notice to the requesting party. 

(iv) While the Board’s decision is 

pending and until such time as the 

Board, or the appropriate Reserve Bank 

with concurrence of the Board, approves 

the capital distribution at issue, the 

covered savings and loan holding 

company may not make such capital 

distribution. 

(k) Post notice requirement. A covered 

savings and loan holding company must 

notify the Board and the appropriate 

Reserve Bank within 15 days of making 

a capital distribution if: 

(1) The capital distribution was 

approved pursuant to paragraph (j)(3) of 

this section; or 

(2) The dollar amount of the capital 

distribution will exceed the dollar 

amount of the covered savings and loan 

holding company’s final planned capital 

distributions, as measured on an 

aggregate basis beginning in the fourth 

quarter of the planning horizon through 

the quarter at issue. 

PART 252—ENHANCED PRUDENTIAL 

STANDARDS (REGULATION YY) 

■ 9. The authority citation for part 252 

continues to read as follows: 

Authority: 12 U.S.C. 321–338a, 481–486, 

1467a, 1818, 1828, 1831n, 1831o, 1831p–l, 

1831w, 1835, 1844(b), 1844(c), 3101 et seq., 

3101 note, 3904, 3906–3909, 4808, 5361, 

5362, 5365, 5366, 5367, 5368, 5371. 


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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 7949 

Subpart E—Supervisory Stress Test 

Requirements for Certain U.S. Banking 

Organizations With $100 Billion or 

More in Total Consolidated Assets and 

Nonbank Financial Companies 

Supervised by the Board 

■ 10. Amend § 252.44 by revising 

paragraphs (a)(3) and (d) to read as 

follows: 

§ 252.44 Analysis conducted by the Board. 

(a) * * * 

(3) In conducting the analysis, the 

Board will not incorporate changes to a 

firm’s business plan that are likely to 

have a material impact on the covered 

company’s capital adequacy and 

funding profile in its projections of 

losses, net income, pro forma capital 

levels, and capital ratios. 

* * * * * 

(d) Frequency of analysis conducted 

by the Board—(1) General. Except as 

provided in paragraph (d)(2) of this 

section, the Board will conduct its 

analysis of a covered company 

according to the frequency in Table 1 to 

§ 252.44(d)(1). 

TABLE 1 TO § 252.44(D)(1) 

If the covered company is a: Then the Board will conduct its analysis: 

Global systemically important BHC .......................................................... Annually. 

Category II bank holding company .......................................................... Annually. 

Category II U.S. intermediate holding company ...................................... Annually. 

Category III bank holding company ......................................................... Annually. 

Category III U.S. intermediate holding company ..................................... Annually. 

Category IV bank holding company ......................................................... Biennially, occurring in each year ending in an even number. 

Category IV U.S. intermediate holding company ..................................... Biennially, occurring in each year ending in an even number. 

Nonbank financial company supervised by the Board ............................. Annually. 

(2) Change in frequency. (i) The Board 

may conduct a stress test of a covered 

company on a more or less frequent 

basis than would be required under 

paragraph (d)(1) of 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. 

(ii) A Category IV bank holding 

company or Category IV U.S. 

intermediate holding company may 

elect to have the Board conduct a stress 

test with respect to the company in a 

year ending in an odd number by 

providing notice to the Board and the 

appropriate Federal Reserve Bank by 

January 15 of that year. Notwithstanding 

the previous sentence, such a company 

may elect to have the Board conduct a 

stress test with respect to the company 

in the year 2021 by providing notice to 

the Board and the appropriate Federal 

Reserve Bank by April 5, 2021. 

(3) Notice and response—(i) 

Notification of change in frequency. If 

the Board determines to change the 

frequency of the stress test under 

paragraph (d)(2)(i) of this section, the 

Board will notify the company in 

writing and provide a discussion of the 

basis for its determination. 

(ii) Request for reconsideration and 

Board response. Within 14 calendar 

days of receipt of a notification under 

paragraph (d)(3)(i) of this section, a 

covered company may request in 

writing that the Board reconsider the 

requirement to conduct a stress test on 

a more or less frequent basis than would 

be required under paragraph (d)(1) of 

this section. A covered company’s 

request for reconsideration must include 

an explanation as to why the request for 

reconsideration should be granted. The 

Board will respond in writing within 14 

calendar days of receipt of the 

company’s request. 

Subpart F—Company-Run Stress Test 

Requirements for Certain U.S. Bank 

Holding Companies and Nonbank 

Financial Companies Supervised by 

the Board 

■ 11. Amend § 252.54 revising 

paragraph (b)(2)(i)(B) to read as follows: 

§ 252.54 Stress test. 

* * * * * 

(b) * * * 

(2) * * * 

(i) * * * 

(B) Is not a Category IV bank holding 

company. 

* * * * * 

■ 12. Amend § 252.56 by revising 

paragraph (a)(2) to read as follows: 

§ 252.56 Methodologies and practices. 

(a) * * * 

(2) The potential impact on the 

regulatory capital levels and ratios 

applicable to the covered bank, and any 

other capital ratios specified by the 

Board, and in doing so must: 

(i) Incorporate the effects of any 

capital action over the planning horizon 

and maintenance of an allowance for 

loan losses or adjusted allowance for 

credit losses, as appropriate, for credit 

exposures throughout the planning 

horizon; and 

(ii) Exclude the impacts of changes to 

a firm’s business plan that are likely to 

have a material impact on the covered 

company’s capital adequacy and 

funding profile. 

* * * * * 

■ 13. Amend § 252.58 by revising 

paragraph (a)(1) to read as follows: 

§ 252.58 Disclosure of stress test results. 

(a) * * * 

(1) In general. A covered company 

must publicly disclose a summary of the 

results of the stress test required under 

§ 252.54 within the period that is 15 

calendar days after the Board publicly 

discloses the results of its supervisory 

stress test of the covered company 

pursuant to § 252.46(b), unless that time 

is extended by the Board in writing. 

* * * * * 

Appendix B to Part 252—[Amended] 

■ 14. Amend appendix B to part 252 by 

removing and reserving section 2.6. 

By order of the Board of Governors of the 

Federal Reserve System. 

Ann Misback, 

Secretary of the Board. 

[FR Doc. 2021–02182 Filed 2–2–21; 8:45 am] 

BILLING CODE P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 791 

[Docket No. NCUA–2020–0098] 

RIN 3133–AF28 

Role of Supervisory Guidance 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: The NCUA Board is adopting 

a final rule that codifies the Interagency 

Statement Clarifying the Role of 


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