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Friday, March 18, 2011

Fed Releases Terms of Capital & Dividend Review of Largest Institutions

The Federal Reserve released its Comprehensive Capital Analysis and Review (CCAR) – an evaluation of the capital planning processes for the 19 largest, most complex institutions. The report found broad improvement in the capital position of these institutions (referred to as “SCAP” institutions).
In total, the 19 SCAP bank holding companies have added roughly $25 billion in retained earnings to common equity since the end of 2008.

Overall, both the quantity and quality of capital at many large bank holding companies have improved since the financial crisis, with the weighted average Tier 1 common ratio for the 19 SCAP bank holding companies rising from 5.4 percent as of 4Q 2008 to 9.4 percent as of 4Q 2010, reflecting an overall increase in Tier 1 common capital of $275 billion at these firms.
The review assessed the capital planning processes – including increasing dividend payments or repurchasing or redeeming stock. All 19 institutions were required to submit plans by January 7, 2011, even if no change in stock or dividends were planned. Not all of the institutions proposed dividend or stock changes; for those that proposed changes, the Federal Reserve will report any objections in a confidential notice no later than March 21, 2011.

Read the report.

See the final page for the economic stress conditions used during the review.

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