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Fed finalizes qualitative CCAR exemption for banks under $250B in assets

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Fed finalizes qualitative CCAR exemption for banks under $250B in assets

The Federal Reserve Board removed certain bank holding companies with total consolidated assets under $250 billion from the qualitative assessment under the 2017 Comprehensive Capital Analysis and Review cycle.

The final rule excludes bank holding companies and U.S. intermediate holding companies of foreign banking organizations not identified as global systemically important banks with total assets between $50 billion and $250 billion and total nonbank assets of less than $75 billion, effective for the 2017 cycle. These companies will still be subject to the quantitative review.

The proposal also suggested removing companies with less than $10 billion in foreign exposure from the qualitative assessment. However, this criterion was removed from the final rule in response to comments.

Under the qualitative review, the board evaluates the strength of each company's capital planning process. The quantitative assessment evaluates the company's capital adequacy, based on hypothetical scenarios of severe economic and financial market stress.

The final rule also lowered the amount of additional capital a company can distribute to shareholders beyond the authorized amount under its capital plan. The amount was decreased to 0.25% of its Tier 1 capital, down from 1% of its Tier 1 capital.

The release also noted that the scenarios and instructions for the 2017 CCAR cycle will be released by the end of the week.