-
All 31 firms that took this year's Dodd-Frank Act Stress Test had enough capital to withstand the Fed's hypothetical severe economic scenario, but several of the largest banks were teetering on the edge of the leverage and risk-based capital requirements.
March 5 -
The Federal Reserve rejected capital plans for three foreign-owned banks, which need time and millions of dollars in investments to make the requisite tech upgrades in order to comply.
April 3 -
Predictions vary widely on how hard it will be for foreign banks to comply with a new capital rule from the Federal Reserve. Many will have to sell branches or loans, or they may just need to shuffle some legal paperwork, depending on whom you speak with.
March 5 -
Last year started with a failed stress test and ended with the bank under scrutiny for everything from its capital management to its subprime auto lending policies. But regaining the confidence of regulators is only half the battle; Santander must also figure out how to regain market share its been losing to competitors.
January 5
Foreign banks did slightly better in this year's Comprehensive Capital Analysis and Review compared with last year, but two foreign institutions still had problems.
In results released on Wednesday, both Deutsche Bank and Santander Holdings USA failed the qualitative aspect of the CCAR,
Two other foreign banks that failed last year HSBC North America and RBS Citizens Financial turned in better performances this time around, as both passed.
An additional three foreign banks BMO Financial, BBVA Compass and MUFG Americas Holdings passed for the second straight year.
Since CCAR examines banks through scenarios that use their own capital plans, CCAR provide a more realistic assessment of how the bank would perform. The results from Deutsche Bank and Santander show that the Fed is concerned that each company lacks the necessary internal controls to manage risk.
The Fed is concerned with Santander's "governance, internal controls, risk identification and risk management, management information systems, and assumptions and analysis that support the [bank holding company's] capital planning processes," according to the CCAR results.
In the case of Deutsche Bank, the Fed's objections relate to the German company's "risk-identification, measurement and aggregation processes; approaches to loss and revenue projection; and internal controls."
Santander
The Fed informed Santander that it objected to its capital plan on a qualitative basis "due to widespread and substantial weaknesses across capital planning processes," the company said in a Wednesday press release.
"The qualitative assessment highlights that we still have meaningful work to do to meet our regulators expectations and our own standards of excellence," Scott Powell, chief executive of Santander Holdings USA, said in the release.
Santander Holdings USA, the holding company for $80 billion-asset Santander Bank in Boston, is not prohibited from paying a dividend on its outstanding class of preferred stock, although any capital action requires approval from the Fed, per an outstanding enforcement action. In March 2014, Santander Holdings USA
The Fed did object to the payment of dividends on the common stock of Santander Consumer USA Holdings, the auto lender that is also part of Banco Santander.
Banco Santander, the Spanish parent of Santander Holdings, has taken steps to improve its retail banking operations. Earlier this month it
Deutsche Bank said that the Fed objected to the capital plan of its Deutsche Bank Trust unit for qualitative reasons "which did not include any planned dividend or share repurchases. Deutsche Bank is committed to strengthening and enhancing its capital planning process [and] has hired 1,300 employees dedicated to ensuring that its systems and controls are best in class, and has hired over 500 employees across its various control functions in the U.S."
Last year, the
They represent "the culmination of significant effort across the organization to improve our capital planning, stress-testing and risk management processes," Van Saun said in a news release. "Citizens has made great strides over the past year in many areas, though we recognize that there is more to do. We will continue to stay focused on enhancing our capabilities going forward."
New
The CEO of HSBC's U.S. arm, Pat Burke, made similarly upbeat comments.
"That the Fed approved our capital plan is an important step forward in building a U.S. organization that drives profitable growth and meets the expectations of our regulators," Burke said.