–Expects to Start Evaluating Capital Action Plans in Q1

WASHINGTON (MNI) – The following is a release issued by the Federal
Reserve Wednesday on large bank holding company capital actions expected
in 2011 in line with Basel III and Dodd-Frank:

The Federal Reserve Board on Wednesday issued guidelines for
evaluating proposals by large bank holding companies (BHCs) to undertake
capital actions in 2011, such as increasing dividend payments or
repurchasing or redeeming stock. The criteria provide a common,
conservative approach to ensure that BHCs hold adequate capital to
maintain ready access to funding, continue operations, and continue to
serve as credit intermediaries, even under adverse conditions.

The criteria for evaluating capital distributions are outlined in a
revised temporary addendum to Supervision and Regulation letter 09-4,
“Dividend Increases and Other Capital Distributions for the 19
Supervisory Capital Assessment Program Firms.” The guidelines state that
any capital distribution plan will be evaluated on the basis of a number
of criteria, with particular emphasis on:

* the firm’s ability to absorb losses over the next two years under
several scenarios, including an adverse macroeconomic scenario specified
by the Federal Reserve and adverse scenarios appropriate for a
particular firm’s business model and portfolios;

* how the firm will meet Basel III capital requirements as they
take effect in the United States, in the context of the proposed capital
distributions as well as any anticipated impact of the Dodd-Frank Wall
Street Reform and Consumer Protection Act on the firm’s business model
or capital adequacy; and

* the firm’s plans to repay U.S. government investments, if
applicable. BHCs are expected to complete the repayment or replacement
of any U.S. government investments in the form of either preferred
shares or common equity prior to increasing capital payouts through
higher dividends or stock buybacks.

The Federal Reserve expects to respond to capital distribution
requests beginning in the first quarter.

The Federal Reserve will evaluate requests for planned capital
actions in the context of its broader process for assessing capital
adequacy at the largest BHCs. As part of the regular supervisory
process, the Federal Reserve is requesting that large U.S. BHCs submit
comprehensive capital plans by early next year, regardless of whether a
capital action is planned. The capital plan review is the latest step in
the Federal Reserve’s efforts to enhance supervision of banking
organizations. As recognized by the Dodd-Frank Act and demonstrated by
the Federal Reserve-led Supervisory Capital Assessment Program in 2009,
regular, horizontal reviews across groups of firms provide regulators
with both firm-specific and industry-wide perspectives of various issues
and trends. The Federal Reserve plans to undertake these capital plan
reviews on a regular basis and will consult with primary federal bank
regulators.

** Market News International Washington Bureau: 202-371-2121 **

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