In a bind: how CCAR constrains US bank strategy

Fed’s stress tests are forcing banks to cut loan portfolios and trading assets

Image of red tape

Earlier this year, a large international bank reluctantly jettisoned one of its US lending portfolios. The loans were perfectly healthy and would have remained on the firm’s books were it not for the capital they required under the US Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR). 

“We had a lending portfolio where we felt the return on a risk-adjusted basis – when you look at CCAR stressed conditions – didn’t justify the risk going forward,” says the firm’s head of stress

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