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What Is CCAR

CCAR is a regulatory framework that helps supervise large bank holding companies with over $50 billion in assets. It ensures these companies have sufficient capital to continue operating during financial stress by facilitating internal capital planning and proposed distributions. A key part of the process is a capital plan that banks must submit addressing elements like expected capital uses and changes, maintaining minimum capital ratios, and their overall capital policy. Banks face challenges in meeting CCAR expectations, such as inferior data quality, large data volume needs, regulatory reporting complexity, and the significant time and resources required.

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102 views1 page

What Is CCAR

CCAR is a regulatory framework that helps supervise large bank holding companies with over $50 billion in assets. It ensures these companies have sufficient capital to continue operating during financial stress by facilitating internal capital planning and proposed distributions. A key part of the process is a capital plan that banks must submit addressing elements like expected capital uses and changes, maintaining minimum capital ratios, and their overall capital policy. Banks face challenges in meeting CCAR expectations, such as inferior data quality, large data volume needs, regulatory reporting complexity, and the significant time and resources required.

Uploaded by

SA1234567
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is CCAR -

CCAR is a regulatory framework that helps supervise, assess and regulate the BHCs. It ensures that Large
Bank Holding Companies (consolidated assets of $50 billion or more) have enough capital to continue
their operations through times of financial stress.
Purpose of the CCAR -
The main purpose of the CCAR is to facilitate the Bank Holding Company’s internal planning process and
its proposed capital distributions. Adequate capital is crucial for the BHCs to absorb any kind of
unexpected loss and continue to lend to consumers and businesses.
Elements in a Capital Plan:
A capital plan is a written presentation of the company’s capital adequacy and capital planning
strategies that includes some mandatory elements. These mandatory elements are listed below:

An assessment of expected use of capital


Description of the planned capital actions.
Expected changes to BHC’s business plan that would impact its capital adequacy
BHC’s process for capital adequacy assessment including the BHC’s method of maintaining capital ratios
above regulatory minimum levels.
BHC’s capital policy
CCAR Challenges for Banks:
Banks face challenges in meeting the qualitative aspects of the CCAR expectations. They need to revamp
business intelligence, revenue projections, capital planning and risk monitoring.
The challenges can be divided into two categories, viz., Data Challenges and Regulatory Reporting
Challenges.
Data Challenges -
Inferior data quality that creates resistance to comply with the CCAR reporting.
There are huge gaps in data quality, availability and accuracy that need to be eliminated.
Large volumes of data needed to be maintained to perform stress tests.
Due to rapid growth of data requirements, the system needs to be upgraded periodically to increase
memory and storage.
Regulatory Reporting Challenges –
CCAR requires data integration, which is costly and time consuming.
CCAR and DFAST Reporting need to be accurate and cost effective.
Regulations are dynamic and fluctuating in nature and complex
Also Significant amount of time and resources are required for the report preparation process

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