Large Bank Examination Workshop February 2026

Capital Stress Tests

1. Pillar 1 stress tests a. “tail” test b. Sensitivity analysis 2. Pillar 2 stress tests a. Capital stress test

b. Additional scenarios for pillar 2 risks 3. Level of severity? – Look to regulatory guidance 4. Purpose: to demonstrate that the bank can survive a reasonably severe crisis without breaching minimum capital levels

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U.S. Annual Stress Tests • As part of its supervision efforts, the Federal Reserve conducts a supervisory stress test annually. • The stress test assesses how large banks are likely to perform under hypothetical economic conditions.

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