Bank Prudential Regulation & Regulatory Capital
Federal Reserve Board Releases Results for 2015 Comprehensive Capital Analysis and Review
On March 11, 2015, the US Board of Governors of the Federal Reserve System announced that it has not objected to the capital plans of 28 bank holding companies participating in the Comprehensive Capital Analysis and Review. However, Bank of America Corporation is required to submit a new capital plan to address weaknesses in its capital planning processes. The Federal Reserve Board did object to the capital plans of Deutsche Bank Trust Corporation and Santander Holdings USA due to qualitative concerns. There were no objections based on quantitative grounds. Goldman Sachs Group, Inc., JPMorgan Chase & Co., and Morgan Stanley needed to submit adjusted capital actions to meet the minimum post-stress minimum capital requirements.
The Federal Reserve Board press release is available at:
http://www.federalreserve.gov/newsevents/press/bcreg/20150311a.htm .
The CCAR results are available at: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20150311a1.pdf .
Revised List of Validation Rules Issued by European Banking Authority for Supervisory Reporting
On March 11, 2015, the European Banking Authority published a revised list of validation rules for submitting supervisory reporting data. The rules detail the standards and formats that are to be used for submissions of data by national regulators under the Capital Requirements Directive IV. The revised list displays the rules that have been deactivated due to technical issues or incorrectness.
The EBA press release and updated validation rules are available at: http://www.eba.europa.eu/-/eba-issues-revised- list-of-its-validation-rul-4 .
Bank Structural Reform
UK Regulators Consult on Extending Rules to UK Branches of Non-EEA Institutions
On March 16, 2015, the Prudential Regulation Authority and Financial Conduct Authority jointly published a consultation paper on strengthening accountability in banking, setting out the PRA and FCA's proposed plans for extending and tailoring the Senior Manager's Regime, Certification Regime and Conduct Rules to UK branches of non- EEA institutions. The proposals include: (i) incoming non-EEA branches to have their most senior individual approved by the PRA; (ii) senior managers of incoming branches to be subject to a set of PRA responsibilities which reflect areas subject to UK regulation; and (iii) for the scope of the PRA's certification regime for incoming non-EEA branches to be identical to that of UK firms. The new Senior Managers and Certification Regime will apply from March 7, 2016. Comments on the consultation may be submitted until May 25, 2015.
The consultation is available at: http://www.bankofengland.co.uk/pra/Documents/publications/cp/2015/cp915.pdf.
Consumer Protection
UK Regulator Publishes Guidance on Risks Posed to Consumers by Inappropriate Performance Management Practices
On March 16, 2015, the FCA published its guidance consultation on risks to customers from performance management at firms. This report is aimed at trade associations as well as all financial firms that deal with retail customers directly. The report discusses performance management practices and acknowledges that poorly executed performance management can lead to mis-selling for various reasons, including pressure to meet individual targets and corporate objectives. The report recommends that firms manage these risks, and identifies poor practices that can create undue pressure on staff. The guidance recommends that controls should be put in place to mitigate the increased risk of mis- selling adequately. Comments on the consultation may be submitted until May 15, 2015.
The guidance consultation is available at: http://www.fca.org.uk/static/documents/guidance-consultations/gc15-01.pdf.
Derivatives
US Commodity Futures Trading Commission Solicits Public Comment in Response to the US District Court Order Regarding Cross-Border Litigation
On March 10, 2015, the US Commodity Futures Trading Commission requested public comment on the US District Court of DC's remand order in Securities Industry and Financial Markets Association, et al. v. CFTC ("Cross-Border Litigation"). The CFTC release expands on its consideration of costs and benefits of 10 swaps rules regarding the treatment of overseas swaps subject to the order and requests comment on the application of the costs and benefits of the rules in the context of extraterritoriality. In Cross-Border Litigation, three trade associations challenged the CFTC's 2013 Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations and requested the court to release 14 swap regulations in terms of overseas applications issued in July 2013. On September 16, 2014, the court granted summary judgment in favor of the CFTC and denied the plaintiffs relief; however it required the CFTC to supplement the 10 swaps regulations with a detailed analysis of associated costs and benefits. Comments are due by May 11, 2015.
The CFTC press release is available at: http://www.cftc.gov/PressRoom/PressReleases/pr7134-15 .
The CFTC request for comment is available at: http://www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2015-05413a.pdf .
To view the full report please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
