Wednesday, March 11, 2015

Fed Fails Deutsche Bank and Santander Capital Plans, BofA required to Submit New Plan by Q3

by Bill McBride on 3/11/2015 04:41:00 PM

From the Federal Reserve: Comprehensive Capital Analysis and Review (CCAR)

The Federal Reserve on Wednesday announced it has not objected to the capital plans of 28 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). One institution received a conditional non-objection based on qualitative grounds, and the Federal Reserve objected to two firms' plans on qualitative grounds.
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The Federal Reserve did not object to the capital plan of Bank of America Corporation, but is requiring the institution to submit a new capital plan by the end of the third quarter to address certain weaknesses in its capital planning processes. The Federal Reserve objected to the capital plans of Deutsche Bank Trust Corporation and Santander Holdings USA on qualitative concerns.
From the WSJ: Federal Reserve Rejects 2 Banks’ Capital Plans in Annual ‘Stress Tests’
Twenty-eight of 31 large banks received Federal Reserve approval to return capital to investors on Wednesday but only after some of the biggest Wall Street firms came perilously close to failing the regulator’s annual “stress test.”

A 29th firm, Bank of America Corp. , received conditional approval of its capital plan and can move forward with boosting dividends or stock buybacks, but must resubmit its proposal to address “certain weaknesses” including its ability to measure losses and revenue, the Fed said. ... The Fed rejected the capital plans of two large banks, the U.S. units of Deutsche Bank AG and Banco Santander SA, for “qualitative” deficiencies including ability to model losses and identify risks. ...

Deutsche Bank, which took the stress test for the first time this year, was rejected for “numerous and significant deficiencies” across several areas of the capital planning process including the bank’s ability to identify risks, the Fed said.