U.S. bank regulators have given four big banks that failed its latest round of stress tests a six-month extension on required revisions to their capital plans.
The U.S. Federal Reserve announced today that it has extended the deadline for capital plan resubmissions by Citigroup, Inc., HSBC North America Holdings, Inc., RBS Citizens, Inc., and Santander Holdings USA, Inc. from June 26 until Jan. 5, 2015; which is the due date for the next round of annual capital plan submissions.
“The extensions will give the firms additional time to address the capital planning weaknesses” that it identified during the Fed’s capital planning component of its stress tests. However, the firms will not be able to increase their distributions to shareholders until new capital plans are approved.
In the wake of the financial crisis, the Fed has begun an annual exercise to ensure that large financial institutions have robust, forward-looking capital planning processes that account for their unique risks, and to help ensure that they have sufficient capital to continue operations throughout times of economic and financial stress. During the latest round of these tests, the Fed objected to the four banks’ current capital plans.