The Comprehensive Capital Analysis and Review (CCAR) is an annual exercise by the Federal Reserve to ensure that institutions have robust, forward-looking capital planning processes. These reporting requirements are applicable for all banks >= 50 Bn in total consolidated assets.
It is onerous for banks to comply with in that it involves submission of very granular data (some at loan level) that cuts across risk and finance/treasury . This means there needs to be reconciliation between risk data and finance data. Some of the data requirements are given below
- Quantitative projections of Balance sheet, P&L, and capital across a range of macroeconomic scenarios
- Qualitative information on methodologies used to develop internal projections of capital across scenarios
- Granular data on asset classes and Pre-Provision Net Revenue (PPNR) for the reporting quarter, for continuous monitoring and comparison of actuals against projections
Typical Issues faced by banks in implementation
- Requires unprecedented level of co-ordination between Risk, Finance, Treasury and Business units
- Annual reporting burden is around 5000 man hours.
- Onerous deadlines within a fortnight of each month-end (monthly, quarterly and annual data as applicable)
- Disparate data sources, inability to reconcile
- Too many manual interventions, unvalidated assumptions and data interpretations
- Risk of error; huge reputational impact
- Inadequacy of documentation.
How we can help
- Creating a separate CCAR data store or integrating it with risk data store, if any
- Reconciliation of CCAR data with accounting data
- Validation of existing CCAR reporting process
- Documentation of the existing process
- Tactical Resource augmentation to alleviate reporting burden for ongoing reporting.
- Developing models that can project P&L and balance sheets
- Reconciling different sets of reports such as FR Y-14, FFIEC101, FR Y-9C as well as Basel I, II and III
- Adaptability to changing regulatory requirements. Product roadmap guarantees alignment of reporting formats with regulatory requirements
- Ongoing managed services reduce the compliance overhead tremendously.