U.S. Fed Urges Banks to Improve Capital Planning

Big banks must improve the way they determine how much capital they need to withstand any future crisis, the U.S. Federal Reserve said, citing observations from regulators’ periodic tests of banks’ health.

The Fed said in a paper released on Monday that banks participating in regular “stress tests” had flaws in their capital planning processes, such as being unable to show that they considered all of the relevant risks to their businesses.

“Large bank holding companies have considerably improved their capital planning processes in recent years, but have more work to do,” the Fed said.

Reuters

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