Page 15 - Banking Industry analysis (H)

scenario every six months to serve as a guide for banks
and building societies designing their own scenarios.” (6)

The U.S. Federal Reserve instituted the Comprehensive

Capital Analysis and Review (CCAR) regulatory framework

to assess, regulate and supervise the large banks. Allied
to this is the Dodd-Frank Act supervisory stress-testing to

see if the bank has sufficient and adequate capital and
whether the capital structure is stable under stress-test

scenarios. It also assesses whether planned dividends are

acceptable and will not bring the breach of minimum

capital requirement.

The common feature of these legislative changes is that

regulators are quite expectedly paying increasing

attention to the health condition of the industry.

Although the United Kingdom commercial banking sector

is like the U.S. commercial banking sector widely

considered to be an oligopoly with five dominant banks in

the U.S. there are four. The U.S banking sector may also

be viewed as comprising Globally Systemically Important

Banks (GSIBS) as well as a clutch of regional banks.