A new ratings framework aligned to regulatory reform priorities

On August 3, 2017, the Federal Reserve Board (Fed) released a notice of proposed rulemaking that would establish a new rating system for large financial institutions (LFIs). Specifically, the new rating system would apply to bank holding companies (BHCs) and non-insurance, non-commercial savings and loan holding companies (SLHCs) with more than $50 billion in total assets, as well as intermediate holding companies (IHCs) of foreign banking organizations.

The proposal includes a new rating scale under which component ratings would be assigned for:

  1. Capital planning and positions,
  2. Liquidity risk management and positions, and
  3. Governance and controls.

In essence, the Fed is revamping its rating system for LFIs to catch up with the Fed’s post-crisis heightened supervisory expectations and approach to LFI supervision.  The Fed proposes to assign initial ratings under the new rating system during 2018.

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FRB Issues Guidance Consolidating Capital Planning Expectations for All Large Financial Institutions


Posted by David Wright, Deloitte Advisory Director on January 26, 2016.

Ever since the first bank stress tests were conducted during the financial downturn, regulatory expectations for capital planning and stress testing have been evolving as both bank supervisors and the industry have gained knowledge and experience. Over the years, those rising expectations have been communicated through examination letters, regulations, range of practice guidance, and capital planning instructions. While those various communications were helpful, they were not memorialized in one set of comprehensive guidance, nor did they address how expectations might differ depending on a firm’s size and complexity—until now.

On December 21, 2015, the Federal Reserve Board (FRB) released guidance—in the form of two Supervision and Regulation Letters (SR Letters)—that consolidates the capital planning expectations for all large financial institutions and clarifies differences in those expectations based on firm size and complexity.

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