JP Morgan Chase 2015 Annual Report Download - page 163

JPMorgan Chase & Co./2015 Annual Report 153
The countercyclical capital buffer is a potential expansion of
the capital conservation buffer that takes into account the
macro financial environment in which large, internationally
active banks function. As of December 31, 2015 the Federal
Reserve reaffirmed setting the U.S. countercyclical capital
buffer at 0%, and stated that it will review the amount at
least annually. The countercyclical capital buffer can be
increased if the Federal Reserve, FDIC and OCC determine
that credit growth in the economy has become excessive
and can be set at up to an additional 2.5% of RWA. On
December 21, 2015, the Federal Reserve, in conjunction
with the FDIC and OCC, requested public comment, due
March 21, 2016, on a proposed policy statement detailing
the framework that would be followed in setting the U.S.
Basel III countercyclical capital buffer.
Based on the Firm’s most recent estimate of its GSIB
surcharge and the current countercyclical buffer being set
at 0%, the Firm estimates its fully phased-in capital
conservation buffer would be 6%.
As well as meeting the capital ratio requirements of Basel
III, the Firm must, in order to be “well-capitalized”,
maintain a minimum 6% Tier 1 and a 10% Total capital
requirement. Each of the Firm’s IDI subsidiaries must
maintain a minimum 5% Tier 1 leverage, 6.5% CET1, 8%
Tier 1 and 10% Total capital standard to meet the
definition of “well-capitalized” under the Prompt Corrective
Action (“PCA”) requirements of the FDIC Improvement Act
(“FDICIA”) for IDI subsidiaries. The PCA standards for IDI
subsidiaries were effective January 1, 2015.
A reconciliation of total stockholders’ equity to Basel III
Standardized and Advanced Fully Phased-In CET1 capital,
Tier 1 capital and Total capital is presented in the table
below. Beginning July 21, 2015, the Volcker Rule provisions
regarding the prohibitions against proprietary trading and
holding ownership interests in or sponsoring “covered
funds” became effective. The deduction from Basel III Tier 1
capital associated with the permissible holdings of covered
funds acquired after December 31, 2013 was not material
as of December 31, 2015. For additional information on the
components of regulatory capital, see Note 28.
Capital components
(in millions) December 31,
2015
Total stockholders’ equity $ 247,573
Less: Preferred stock 26,068
Common stockholders’ equity 221,505
Less:
Goodwill 47,325
Other intangible assets 1,015
Add:
Deferred tax liabilities(a) 3,148
Less: Other CET1 capital adjustments 3,124
Standardized/Advanced CET1 capital 173,189
Preferred stock 26,068
Less:
Other Tier 1 adjustments 210
Standardized/Advanced Tier 1 capital $ 199,047
Long-term debt and other instruments qualifying as
Tier 2 capital $ 16,679
Qualifying allowance for credit losses 14,341
Other (91)
Standardized Fully Phased-In Tier 2 capital $ 30,929
Standardized Fully Phased-in Total capital $ 229,976
Adjustment in qualifying allowance for credit losses for
Advanced Tier 2 capital (9,797)
Advanced Fully Phased-In Tier 2 capital $ 21,132
Advanced Fully Phased-In Total capital $ 220,179
(a) Represents deferred tax liabilities related to tax-deductible goodwill
and to identifiable intangibles created in nontaxable transactions,
which are netted against goodwill and other intangibles when
calculating TCE.