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Agencies Release Statement on Company-run Stress Tests at Medium-sized Financial Companies

June 03, 2015 / Source: Federal Reserve

Federal banking agencies today reiterated the disclosure requirements for the annual stress tests conducted by financial institutions with total consolidated assets between $10 billion and $50 billion.

These medium-sized companies are required to conduct annual, company-run stress tests—implementing a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act—with the results disclosed to the public for the first time this year.

The firms are required to disclose certain information, including: a description of the types of risks included in the stress test; a summary description of the methodologies used in the stress test; estimates of losses, revenue, and net income; post-stress capital ratios; and an explanation of the most significant causes for the changes in regulatory capital ratios.

As the agencies have previously stated, medium-sized companies are not subject to stress tests conducted by the agencies or the Federal Reserve's annual Comprehensive Capital Assessment and Review. The company-run stress tests are hypothetical results and are not intended to be forecasts or expected outcomes, and the agencies will not make any public statements about the results.

Stress test results must be disclosed by the companies between June 15 and June 30. Any questions the public may have regarding the disclosures should be directed to the companies.