FRY13_20170905_omb

Supporting Statement for the
Reporting and Recordkeeping Requirements Associated with
Regulation Y (Capital Plans)
(FR Y-13; OMB No. 7100-0342)
Amendments to the Capital Plan and Stress Test Rules; Regulations Y and YY
(Docket No. R-1548; RIN 7100-AE59)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
with revision, the mandatory Reporting and Recordkeeping Requirements Associated with
Regulation Y (Capital Plans) (FR Y-13; OMB No. 7100-0342). Regulation Y- Bank Holding
Companies and Change in Bank Control (12 CFR part 225) requires large bank holding
companies and U.S. intermediate holding companies (jointly referred to as BHCs) to submit
capital plans to the Board on an annual basis and requires such BHCs to request prior approval
from the Board under certain circumstances before making a capital distribution. Although there
are additional data reporting requirements, there are no required reporting forms associated with
this information collection.
The Board adopted a final rule that revised section 225.8 of Regulation Y. The final rule
defines a large and noncomplex bank holding company as a bank holding company with average
total consolidated assets of $50 billion or more but less than $250 billion, average total nonbank
assets of less than $75 billion, and that is not a bank holding company identified as a U.S. global
systemically important bank holding company (GSIB). Under section 225.8(f)(2) of the final
rule, large and noncomplex firms will no longer be subject to the provisions of the Board’s
capital plan rule whereby the Board can object to a capital plan on the basis of qualitative
deficiencies in the firm’s capital planning process. The first calculation date would be December
31, 2016. The total annual burden for the proposed FR Y-13 is estimated to be 445,886 hours, a
decrease of 54,000 hours from the current burden of 499,886 hours.
Background and Justification
On December 1, 2011, the Board published the Capital Plans final rule (2011 final rule)
in the Federal Register (76 FR 74631) revising the Board’s Regulation Y. Under section 165 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act),
the Board is required to impose enhanced prudential standards on large BHCs, including stress
testing requirements; enhanced capital, liquidity, and risk management requirements; and a
requirement to establish a risk committee.1 The Board believes that it is appropriate to hold large
BHCs to an elevated capital planning standard because of the elevated risk posed to the financial
system by large BHCs and the importance of capital in mitigating these risks.

1

See generally section 165 of Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Dodd-Frank Act); 12 U.S.C. 5365.

During the years leading up to the recent financial crisis, many BHCs made significant
distributions of capital, in the form of stock repurchases and dividends, without due
consideration of the effects that a prolonged economic downturn could have on their capital
adequacy and ability to continue to operate and remain credit intermediaries during times of
economic and financial stress. The 2011 final rule addressed such practices, building upon the
Board’s existing supervisory expectation that large BHCs have robust systems and processes that
incorporate forward-looking projections of revenue and losses to monitor and maintain their
internal capital adequacy.2
On July 1, 2014, the Board published a final rule (2014 final rule) in the Federal Register
(79 FR 64026) modifying the start date of the capital plan and stress test cycles from October 1
of a calendar year to January 1 of the following calendar year. The 2014 final rule also made
other changes, including amending the capital plan rule to limit a bank holding company’s ability
to make capital distributions to the extent that the bank holding company’s actual capital
issuances are less than the amount indicated in its capital plan under baseline conditions,
measured on a quarterly basis. The 2014 final rule also clarified application of the capital plan
rule to a bank holding company that is a subsidiary of a U.S. intermediate holding company of a
foreign banking organization and the characteristics of a stressed scenario to be included in
company run stress tests. The 2014 final rule also revised the Board’s Policy Statement on the
Scenario Design Framework for Stress Testing and the Board’s Regulation YY - Enhanced
Prudential Standards to reflect the revisions to the start date of the stress test cycle.
The FR Y-13 requirements apply to every top-tier BHC domiciled in the United States
that has $50 billion or more in total consolidated assets and U.S. intermediate holding companies
with total consolidated assets of $50 billion or more. There are currently 38 respondents to this
collection. The asset threshold of $50 billion is consistent with the threshold established by
section 165 of the Dodd- Frank Act relating to enhanced supervision and prudential standards for
certain BHCs.
Description of Information Collection
The reporting and recordkeeping requirements are found in sections 225.8(e), (f), and (g).
The Board believes that the requirements help ensure that large BHCs have appropriate capital
plans in place to address their capital adequacy and their ability to continue operating and to
remain credit intermediaries during times of economic and financial stress. Compliance with the
information collections is mandatory. No other federal law mandates these reporting and
recordkeeping requirements.
Reporting Requirements
Section 225.8(e)(1)(ii) requires a BHC to submit its complete capital plan to the Board
and the appropriate Reserve Bank by April 5 of each calendar year, or such later date as directed
2

See SR letter 09-4 (Revised March 27, 2009), available at
www.federalreserve.gov/boarddocs/srletters/2009/SR0904.htm; see also Revised Temporary Addendum to SR letter
09-4 (November 17, 2010) (SR 09-04), available at
www.federalreserve.gov/newsevents/press/bcreg/bcreg20101117b1.pdf.

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by the Board or by the appropriate Reserve Bank with concurrence of the Board.
Section 225.8(e)(3) requires that in connection with submissions of capital plans to the
Board, BHCs are required to provide certain data to the Board, including:
 The BHC’s financial condition, including its capital
 The BHC’s structure
 Amount and risk characteristics of the BHC’s on- and off-balance sheet exposures,
including exposures within the BHC’s trading account, other trading-related exposures
(such as counterparty-credit risk exposures) or other items sensitive to changes in market
factors, including, as appropriate, information about the sensitivity of positions to
changes in market rates and prices
 The BHC’s relevant policies and procedures, including risk management policies and
procedures
 The BHC’s liquidity profile and management
 The loss, revenue, and expense estimation models used by the BHC for stress scenario
analysis, including supporting documentation regarding each model’s development and
validation
 Any other relevant qualitative or quantitative information requested by the Board or the
appropriate Reserve Bank to facilitate review of the BHC’s capital plan
Section 225.8(e)(4) requires the BHC to update and resubmit its capital plan to the
appropriate Reserve Bank within 30 calendar days of the occurrence of certain events.
Section 225.8(f)(3) requires that within 15 calendar days of receipt of a notice of
objection to a capital plan by the Board or appropriate Reserve Bank, the BHC may submit a
written request to the Board requesting reconsideration of the objection, including an explanation
of why reconsideration should be granted. As an alternative to a request for reconsideration, the
BHC may submit a request for an informal hearing.
Under section 225.8(g)(1), in certain circumstances, large BHCs will be required to
obtain prior approval from the Board before making capital distributions. Under 225.8(g)(3), a
BHC may submit a request for non-objection that includes all the information from 225.8(g)(4).
Section 225.8(g)(4) states that prior approval requests contain the following information:
 The BHC’s current capital plan or an attestation that there have been no changes the
capital plan since it was last submitted to the Federal Reserve
 The purpose of the transaction
 A description of the capital distribution, including for redemptions or repurchases of
securities, the gross consideration to be paid and the terms and sources of funding for the
transaction, and for dividends, the amount of the dividend(s)
 Any additional information requested by the Board or appropriate Reserve Bank (which
may include, among other things, an assessment of the BHC’s capital adequacy under a
revised stress scenario provided by the Federal Reserve, a revised capital plan, and
supporting data)
Section 225.8(g)(3)(iii)(A) provides for exceptions to the extent that the Board or
appropriate Reserve Bank indicates in writing its non-objection, following a request for non3

objection from the BHC that includes all of the information required to be submitted under
section 225.8(g)(4).
Section 225.8(g)(6) provides that if the Board or appropriate Reserve Bank disapproves
of a BHC’s capital distribution, the BHC within 15 calendar days of receipt of a notice of
disapproval by the Board may submit a written request for a hearing.
Recordkeeping Requirements
Section 225.8(e)(1)(i) requires a BHC to develop and maintain a capital plan. The level of
detail and analysis expected in a capital plan will vary based on the BHC’s size, complexity, risk
profile, scope of operations, and the effectiveness of its processes for assessing capital adequacy.
The capital plan must contain at least the following elements:
 An assessment of the expected uses and sources of capital over the planning horizon that
reflects the BHC’s size, complexity, risk profile, and scope of operations, assuming both
expected and stressful conditions
 A detailed description of the BHC’s process for assessing capital adequacy
 The BHC’s capital policy
 A discussion of any expected changes to the bank holding company’s business plan that
are likely to have a material impact on the bank holding company’s capital adequacy or
liquidity
The mandatory elements under each component are described in section 225.8(e)(2).
Section 225.8(e)(1)(iii) requires the BHC’s board of directors or a designated committee
must at least annually review and approve the BHC’s capital plan prior to its submission to the
appropriate Reserve Bank.
Proposed Revisions
The Board adopted a final rule that revises the capital plan and stress test rules for BHCs
with $50 billion or more in total consolidated assets and U.S. IHCs of foreign banking
organizations. Under the final rule, large and noncomplex firms (those with total consolidated
assets of at least $50 billion but less than $250 billion, nonbank assets of less than $75 billion,
and that are not U.S. global-systemically important banks) are no longer subject to the provisions
of the Board’s capital plan rule whereby the Board may object to a capital plan on the basis of
qualitative deficiencies in the firm’s capital planning process. Accordingly, these firms will no
longer be subject to the qualitative component of the annual Comprehensive Capital Analysis
and Review (CCAR). The final rule also modifies certain regulatory reports to collect additional
information on nonbank assets and to reduce reporting burdens for large and noncomplex firms.
For all bank holding companies subject to the capital plan rule, the final rule simplifies the initial
applicability provisions of both the capital plan and the stress test rules, reduces the amount of
additional capital distributions that a bank holding company may make during a capital plan
cycle without seeking the Board’s prior approval, and extends the range of potential as-of dates
the Board may use for the trading and counterparty scenario component used in the stress test
rules.

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Under section 225.8(f)(2) of the final rule, large and noncomplex firms will no longer be
subject to the provisions of the Board’s capital plan rule whereby the Board can object to a
capital plan on the basis of qualitative deficiencies in the firm’s capital planning process. In
feedback meetings that the Board held on CCAR, participants from large and noncomplex firms
expressed the view that the provision of the rule permitting the Board to object to a capital plan
on the basis of qualitative deficiencies, in their view, required a large and noncomplex firm to
develop a large amount of documentation and stress test models to the same degree as the largest
firms in order to avoid risk of a public objection to its capital plan. Accordingly, this revision to
section 225.8(f)(2) is expected to reduce the recordkeeping requirements for large and
noncomplex firms by approximately 25 percent, or 3,000 hours for large and noncomplex firms.
The final rule defines a large and noncomplex bank holding company as a bank holding
company with average total consolidated assets of $50 billion or more but less than $250 billion,
average total nonbank assets of less than $75 billion, and that is not a bank holding company
identified as a U.S. GSIB. While the total consolidated assets measure is calculated for purposes
of other regulatory requirements, the new average total nonbank assets threshold is not otherwise
calculated for purposes of a regulatory requirement.
For the first calculation date (December 31, 2016), firms will be required to calculate
nonbank assets by aggregating items reported on other reporting forms. Specifically, nonbank
assets will be calculated as (A) total combined nonbank assets of nonbank subsidiaries, as
reported on line 15a of Schedule PC-B of the Parent Company Only Financial Statements for
Large Holding Companies (FR Y-9LP; OMB No. 7100-0128) as of December 31, 2016; plus (B)
the total amount of equity investments in nonbank subsidiaries and associated companies as
reported on line 2a of Schedule PC-A of the FR Y-9LP as of December 31, 2016; plus (C) assets
of each Edge and agreement corporation, as reported on the Consolidated Report of Condition
and Income for Edge and Agreement Corporations (FR 2886b; OMB No. 7100-0086) as of
December 31, 2016, to the extent such corporation is designated as “Nonbanking” in the box on
the front page of the FR 2886b; minus (D) assets of a federal savings association, federal savings
bank, or thrift subsidiary, as reported on the Report of Condition and Income (Call Report)
(FFIEC 031, FFIEC 041, and FFIEC 051; OMB No. 7100-0036) as of December 31, 2016.
Performing this calculation is expected to require 1 hour per firm.
Time Schedule for Information Collection
Information collection pursuant to the recordkeeping requirements is event-generated and
must be maintained onsite. The reporting of an initial or resubmission of a revised capital plan,
the submission of data pursuant to section 225.8(e)(3), and the submission of prior approval
requests must be provided to the Board within the time periods established by the regulation:
 Section 225.8(e)(1)(ii) requires a BHC to submit its complete capital plan to the Board
and the appropriate Reserve Bank each year by April 5th, or such later date as directed by
the Board or by the appropriate Reserve Bank with concurrence of the Board
 Section 225.8(e)(1)(iii) requires the BHC’s board of directors or a designated committee
to review and approve the BHC’s capital plan prior to its submission to the appropriate
Federal Reserve Bank

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





Section 225.8(e)(3) requires BHCs to provide certain data to the Board, upon the request
of the Board or appropriate Reserve Bank
Section 225.8(e)(4) requires the BHC to update and resubmit its capital plan within 30
calendar days of the occurrence of certain events
Section 225.8(f)(3) provides that the BHC may submit a written request for
reconsideration within 15 calendar days of receipt of a notice of objection by the Board
of the BHC’s capital plan
Section 225.8(g)(1) provides that, in certain circumstances, large BHCs will be required
to obtain prior approval from the Board before making capital distributions
Section 225.8(g)(6) provides that the BHC may submit a written request for a hearing
within 15 calendar days of receipt of a notice of disapproval (of a capital plan) by the
Board

Legal Status
The Board’s Legal Division has determined that Section 616(a) of the Dodd-Frank Act
amended section 5(b) of the Bank Holding Company Act (BHC Act) (12 U.S.C. § 1844(b)) to
specifically authorize the Board to issue regulations and orders relating to capital requirements
for BHCs. The Board is also authorized to collect and require reports from BHCs pursuant to
section 5(c) of the BHC Act (12 U.S.C. § 1844(c)). Additionally, the Board’s rulemaking
authority for the information collection and disclosure requirements associated with the FR Y-13
is found in sections 908 and 910 of the International Lending Supervision Act, as amended (12
U.S.C. §§ 3907 and 3909). Additional support for FR Y-13 is found in sections 165 and 166 of
the Dodd-Frank Act (12 U.S.C. §§ 5365 and 5366).3
The capital plan information submitted by the covered BHC will consist of confidential
and proprietary modeling information and highly sensitive business plans, such as acquisition
plans submitted to the Board for approval. Therefore, it appears the information will be subject
to withholding under exemption 4 of the Freedom of Information Act (5 U.S.C. §552(b)(4)).
Consultation Outside of the Agency
On September 30, 2016, the Board published a notice of proposed rulemaking in the
Federal Register (81 FR 67239) for public comment. The comment period for this notice expired
on November 25, 2016. The Board did not receive any specific comments related to the
Paperwork Reduction Act (PRA) analysis. On February 3, 2017, the Board published a final rule
in the Federal Register (82 FR 9308). The final rule is effective on March 6, 2017.
Estimate of Respondent Burden
The current annual burden is estimated to be 499,886 hours. The Board estimates the
3

Section 165 requires the Board to impose enhances prudential standards on large BHCs, including stress testing
requirements; enhanced capital, liquidity, and risk management requirements; and a requirement to establish a risk
committee. Section 166 requires the Board to impose early remediation requirements on large BHCs under which a
large BHC experiencing financial distress must take specific remedial actions in order to minimize the probability
that the company will become insolvent and to minimize the potential harm of such insolvency the United States.

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proposed annual burden to be 445,886, a decrease of 54,000 hours, due to adopting the changes
to reduce capital planning burden. The final rule reduces the burden for large non-complex firms
under 225.8(e)(1) by 3,000 hours per response. These reporting and recordkeeping requirements
represent approximately 3.6 percent of total Federal Reserve System paperwork burden.

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Number of
respondents4

FR Y-13

Estimated
Annual
average hours
frequency
per response

Estimated
annual burden
hours

Current
Reporting
Section 225.8(e)(1)(ii)
Section 225.8(e)(3)
Section 225.8(e)(4)
Section 225.8(f)(3)(i)
Section 225.8(g)(1), (3), and (4)
Section 225.8(g)(3)(iii)(A)
Section 225.8(g)(6)

28
38
10
2
26
2
2

1
1
1
1
1
1
1

80
1,005
100
16
100
16
16

2,240
38,190
1,000
32
2,600
32
32

Recordkeeping
Section 225.8(e)(1)(i)
Section 225.8(e)(1)(iii)

38
28

1
1

11,920
100

452,960
2,800

Current Total
Proposed
Reporting
Section 225.8(e)(1)(ii)
Section 225.8(e)(3)
Section 225.8(e)(4)
Section 225.8(f)(3)(i)
Section 225.8(g)(1), (3), and (4)
Section 225.8(g)(3)(iii)(A)
Section 225.8(g)(6)
Recordkeeping
Section 225.8(e)(1)(i)
Large Complex Firms
Section 225.8(e)(1)(i)
Large Non-Complex Firms
Section 225.8(e)(1)(iii)

499,886

28
38
10
2
26
2
2

1
1
1
1
1
1
1

80
1,005
100
16
100
16
16

2,240
38,190
1,000
32
2,600
32
32

20

1

11,920

238,400

18

1

8,920

160,560

28

1

100

2,800

Proposed Total

445,886

Change

(54,000)

4

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/contracting/getting-started-contractor/make-sureyou-meet-sba-size-standards/table-small-business-size-standards.

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The total cost to the public is estimated to decrease from the current level of $27,443,741 to
$24,479,141 for the revised FR Y-13.5
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Cost to the Federal Reserve System
The cost to the Federal Reserve System for the reporting requirements associated with the
FR Y-13 information collection is estimated to be $106,400. This is equivalent to one full time
employee on an annual basis. The other capital plan requirements, associated with the FR Y-13,
have been integrated into the Board’s existing supervisory process.

5

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$67, 15% Lawyers at $67, and 10% Chief Executives at $93). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2016, published March 31, 2017, www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

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