Proposed Interagency Guidance on Company-Run Stress Tests

Capital

August 9, 2013

Summary:

The federal banking agencies are issuing proposed interagency stress-testing guidance outlining principles for implementation of stress tests as mandated by Section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA). This guidance is applicable to all FDIC-supervised banks and savings associations with at least $10 billion but less than $50 billion in total consolidated assets. The guidance sets forth supervisory expectations for DFA stress-test practices and provides information about methodologies these institutions should use.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter is not applicable to FDIC-supervised banks and savings associations with total assets less than $1 billion.

Highlights:

The proposed guidance describes supervisory expectations for DFA stress-testing practices for institutions with total consolidated assets between $10 billion and $50 billion.
The proposed guidance underscores the importance of stress testing as an ongoing risk management practice that supports an institution's forward-looking assessment of its risks and better equips the institution to address a range of macroeconomic and financial outcomes.
The proposed guidance provides additional details to help these companies conduct stress tests based on their size, complexity, risk profile, business mix, and market footprint.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Risk Officer

Note:
FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2013/index.html .

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html .

Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).