Banking: CCAR & DFAST

Discussion in 'Trading' started by hhiusa, Jun 22, 2017.

  1. hhiusa

    hhiusa

    I believe there are 7 banks that fall under CCAR.

    I was listening to the matter of whether the banks will pass the stress test, i.d. whether the fed object to their proposed capital actions or not. All 7 are expected to pass the quantitative. The only portion I hear concern for is the qualitative of some.

    CCAR
    quant and quali

    DFAST
    quant only

    The banking sector has taken a beating lately; although, not all banks have been blighted. Regional banks are only held to the less intensive DFAST. I would be even more bullish now than I was two weeks ago. Since the standards were set high post-recession, most will have way overshot the requirements for now. It is my understanding this allow them to free up some capital even without the Trump deregulation. I would imagine this would be quite beneficial.

    DFAST banks are only included if they have at least $10 billion in total assets.

    Or has the industry dropped in anticipation? Maybe I am wrong and this will not bear any fruit.
     
  2. hhiusa

    hhiusa

    Another bad day for banking. Deregulate, baby, Deregulate!

    [​IMG]
     
  3. hhiusa

    hhiusa

    The most severe hypothetical scenari projects $383 billion in loan losses at the 34 participating bank holding companies during the nine quarters tested. "This year's results show that, even during a severe recession, our large banks would remain well capitalized," Fed Reserve governor James Powell said. This is the seventh round stress tests since the recession and the fifth since the 2012 Dodd-Frank Act.

    The CCAR results will be released June 28, at 4:30 PM Eastern.

    A correction to my previous post.
    CCAR
    Quant assessment for BHCs & IHCs with >=$50B in total consolidated assets
    Quali assessment for LISCC & "large and complex" firms
    Large and Complex firms
    US IHCs with TCA >=$250B
    total non-bank assets >=$75B
    not a LISCC

    LISCCs
    AIG (AIG)
    BofA (BAC)
    BNY Mellon (BK)
    Barclays (BCS)
    Citigroup (C)
    Deutsche Bank (DB)
    Goldman Sachs (GS)
    JP Morgan (JPM)
    Morgan Stanley (MS)
    Prudential Financial (PRU)
    State Street (STT)
    UBS (UBS)
    Wells Fargo (WFC)
    US IHCs not yet subject to Dodd-Frank Act - (Subject to in 2018)
    16. Credit Suisse Holdings (USA) LLC - IHC (other non-depository credit intermediation)
    19. Barclays US LLC - IHC (office of bank holding companies)
    20. Deutsche Bank USA Corp - IHC (office of bank holding companies)
    27. RBC USA Holdco Corporation - IHC (office of bank holding companies)
    28. UBS Americas Holdings LLC - IHC (office of bank holding companies)
    30. BNP Paribas USA - IHC (office of bank holding companies)
    Assets listed in the thousands
    [​IMG]

    Currently, no nonbank financial companies supervised by the Board are subject to capital planning.
     
  4. sss12

    sss12

    @hhiusa looking at sell side research, I'm pretty sure positive test results were/are expected. I still think the weakness is due to the doubts on regulatory relief and a 2.15 on the 10 yr. But, both of these issues could possibly be resolved quickly, and then you have your catalyst.
     
  5. hhiusa

    hhiusa

    Expected yes, but you are looking at this on a much too macroscopic level. Those banks and non-banks for ease of consolidation of terms have differing roles, and vastly different level of liquidity. They are publicly traded and I imagine it will affect them differently.

    Sometimes, I just think out loud here.