DCG’s development of a dynamic capital plan lays the foundation for your institution to meet its operational and growth plans for the future.
Regulatory expectations for sound capital planning processes have elevated in response to recent economic downturn. OCC bulletin 2012-16 clearly outlines this notion. Specifically, the bulletin highlights the following:
“A robust capital planning process is an integral and significant part of a bank’s governance process necessary to ensure safe and sound operations and ongoing viability.”
Furthermore, Basel III has raised the bar in terms of capital requirements for financial institutions of all sizes—and has become more of a focal point of regulatory examinations. The burden now falls squarely on the institution to show that it has sufficient capital in place to meet its expected growth plans, provide an appropriate cushion for absorbing unanticipated losses and accommodate strategies for preemptive/corrective action should economic conditions warrant.
Time to “re-flate” capital planning playbook? Read DCG Managing Director Vinny Clevenger’s article.
Enter capital planning…
DCG’s Capital Planning and Stress Testing service provides a multi-dimensional forecast that projects capital ratios on a pro-forma basis that gives ALCO and the Board a clearer understanding of where their internal policy minimums should be set. Our Capital Plan consists of three primary tools:
- Three-year performance model: It is critical to identify the impact to capital over a longer-term horizon.
- Stress tests: We incorporate stress scenarios to reflect the impact of unanticipated events related to credit risk, interest rate risk and liquidity risk.
- Contingency planning: As a result of the stress testing, we help the institution formulate a host of strategies to remediate any potential stress on their capital position.
Understanding your capital’s ability to support growth and absorb loss should be a major focus of your risk management process. Let DCG’s Capital Planning and Stress Testing solution provide you with a clear understanding of the adequacy of your capital levels today and tomorrow.