Regulators Issue Stress Guidelines for Mid-Sized Banks

Banking regulators on Wednesday issued final stress test guidance for medium-sized firms with assets ranging from $10 billion to $50 billion, saying banks that size are not subject to the same requirements as so-called "too big to fail" banks.

The final guidance from the Federal Reserve Board, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency is similar to proposed guidance issued by the agencies last year, according to a statement released by the regulators.

These medium-sized companies are required to conduct annual, company-run stress tests under rules issued by regulators in October to adhere to a provision contained in the Dodd-Frank banking reform act.

These companies are required to perform their first stress tests under the Dodd-Frank Act by March 31, according to the regulators.

The agencies said they have crafted stress test rules that are “flexible to accommodate different risk profiles, sizes, business mixes, market footprints, and complexity for companies in the $10 billion to $50 billion asset range.”

Consistent with this flexibility, the final guidance describes general supervisory expectations for these companies’ Dodd-Frank Act stress tests, and, where appropriate, provides examples of  practices that would be consistent with those expectations.

The agencies said they clarified certain aspects in response to comments received.

The guidance confirms that companies with assets between $10 billion and $50 billion are not  subject to the Federal Reserve’s capital plan rule, the Federal Reserve’s annual Comprehensive  Capital Analysis and Review, Dodd-Frank Act supervisory stress tests, or related data collections, which apply to bank holding companies with assets of at least $50 billion.