WASHINGTON — Bank holding companies with total assets of more than $50 billion will be expected to submit yearly capital plans to its regulator starting next year, the Federal Reserve Board said Friday.
The latest step by the central bank builds upon the recently completed capital review plans undertaken by the 19 largest holding companies in the U.S. The Board plans to finish its proposal later this year. Comments will be due by August 5.
In a press release, the Fed said each large bank must have a "robust, forward-looking capital planning process" that could continue even during periods of economic stress. At the end of the first quarter, there were 35 firms with assets of more than $50 billion that would fall under the requirement and have to submit capital plans.
Each firm's plan would be based on its size, complexity, risk profile, and scope of operations, according to the Fed.
Board of directors at the firms would have to review and approve capital plans every year prior to submitting them to the Fed, according to the agency.
The central bank would then evaluate an institution's ability to raise its dividend, or repurchase or redeem stock. If the Fed rejected the capital plan, firms would have to get approval before making any capital distributions.
