As part of its annual examination of the capital planning practices of the nation's largest banks, the Federal Reserve Board on Thursday did not object to the capital plans of 34 firms and objected to the capital plan of one firm, according to results of the Comprehensive Capital Analysis and Review, or CCAR. Due in part to recent changes to the tax law that negatively affected capital levels, two firms will maintain their capital distributions at the levels they paid in recent years. Separately, one firm will be required to take certain steps regarding the management and analysis of its counterparty exposures under stress. The Board objected to the capital plan from DB USA Corporation (DB) due to qualitative concerns. Those concerns include material weaknesses in the firm's data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress. The Board issued a conditional non-objection to the capital plans of both Goldman Sachs (GS) and Morgan Stanley (MS) and both firms will maintain their capital distributions at the levels they paid in recent years, which will allow them to build capital over the next year. Each firm's capital ratios, under the capital plans they originally submitted and with the one-time capital reduction from the tax law changes, fell below required levels when subjected to the hypothetical scenario. This one-time reduction does not reflect a firm's performance under stress and firms can expect higher post-tax earnings going forward. The Board also issued a conditional non-objection for the capital plan from State Street Corporation (STT). The stress test revealed counterparty exposures that produced large losses under the hypothetical scenario, which assumes the default of a firm's largest counterparty under stress. The firm will be required to take certain steps regarding the management and analysis of its counterparty exposures under stress. The Federal Reserve did not object to the capital plans of Ally Financial, Inc. (ALLY); American Express Company (AXP); BB&T Corporation (BBT); BBVA Compass Bancshares, Inc. (BBVA); BMO Financial Corp. (BMO); BNP Paribas USA (BNPQY); Bank of America Corporation (BAC); The Bank of New York Mellon Corporation (BNK); Barclays US LLC. (BCS); Capital One Financial Corporation (COF); Citigroup, Inc. (C); Citizens Financial Group (CFG); Credit Suisse Holdings (CS); Discover Financial Services (DFS); Fifth Third Bancorp (FITB); HSBC North America Holdings, Inc. (HSBC); Huntington Bancshares, Inc. (HBAN); JP Morgan Chase & Co. (JPM); Keycorp (KEY); M&T Bank Corporation (MTB); MUFG Americas Holdings Corporation (MUFG); Northern Trust Corp. (NTRS); The PNC Financial Services Group, Inc. (PNC); RBC USA Holdco Corporation (RY); Regions Financial Corporation (RF); Santander Holdings USA, Inc. (SAN); SunTrust Banks, Inc. (STI); TD Group US Holdings LLC (TD); U.S. Bancorp (USB); UBS Americas Holdings LLC (UBS); and Wells Fargo & Company (WFC). Reference Link
