What is the Stress Capital Buffer?

The Stress Capital Buffer (SCB) is a Federal Reserve regulatory capital requirement applied to US bank holding companies with $100B+ in assets, calibrated annually based on stress-test results. It directly constrains bank capital returns including buybacks.

How does SCB affect bank stock buybacks?

Banks must maintain CET1 capital above the regulatory minimum plus their SCB. The lower a bank's SCB, the more excess capital is available for dividends and share repurchases. Bank buyback authorizations after CCAR are typically calibrated to keep CET1 above the SCB-implied floor.

When are SCB results disclosed?

The Federal Reserve publishes individual bank SCB results in late June each year following the conclusion of the CCAR stress test. Banks typically follow with capital-action announcements in early July.

Stress Capital Buffer

Also known as: SCB, Stress Capital Buffer Requirement

A regulatory capital requirement imposed on US bank holding companies based on Federal Reserve stress-test results. SCB directly constrains how much cash large banks can return to shareholders via dividends and buybacks.

Full definition

The Stress Capital Buffer (SCB) is a bank-specific regulatory capital add-on imposed by the Federal Reserve on US bank holding companies with $100 billion or more in total assets. It is calibrated annually based on results of the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR) stress test.

The SCB sets the floor for a bank's Common Equity Tier 1 (CET1) capital ratio. Banks must maintain CET1 above the regulatory minimum (4.5%) plus the SCB (variable, typically 2.5%-5.0% by bank) — together comprising the bank's Stressed Capital Buffer Requirement (SCBR). Banks that fall below the SCBR face automatic restrictions on capital distributions, including dividends and share repurchases.

SCB is the single most important determinant of how aggressively the largest US banks (JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, etc.) can buy back stock. A lower SCB means more excess capital that can be deployed to repurchases. SCB results are disclosed annually following CCAR, typically late June. Banks then announce their planned capital actions — including the dollar amount of buyback authorization — in the following weeks.

Key facts

Imposed byFederal Reserve (Board of Governors)

Applies toBank holding companies with >= $100B total assets

Calibrated viaCCAR stress test (annual)

Typical SCB range2.5%-5.0% by bank

Disclosure timingLate June each year

Frequently asked questions

What is the Stress Capital Buffer?: The Stress Capital Buffer (SCB) is a Federal Reserve regulatory capital requirement applied to US bank holding companies with $100B+ in assets, calibrated annually based on stress-test results. It directly constrains bank capital returns including buybacks.
How does SCB affect bank stock buybacks?: Banks must maintain CET1 capital above the regulatory minimum plus their SCB. The lower a bank's SCB, the more excess capital is available for dividends and share repurchases. Bank buyback authorizations after CCAR are typically calibrated to keep CET1 above the SCB-implied floor.
When are SCB results disclosed?: The Federal Reserve publishes individual bank SCB results in late June each year following the conclusion of the CCAR stress test. Banks typically follow with capital-action announcements in early July.
Which banks have an SCB requirement?: All US bank holding companies with $100 billion or more in total assets, including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, US Bancorp, PNC, Truist, Charles Schwab, and Capital One.

Stress Capital Buffer

Full definition

Key facts

Frequently asked questions

Related terms