REGULATORY MATTERS

12 Months Ended

Dec. 31, 2016

Banking and Thrift [Abstract]

REGULATORY MATTERS

REGULATORY MATTERS

As a BHC, the Company is subject to regulation and supervision by the FRB. The primary subsidiaries of the Company are its two insured depository institutions CBNA, a national banking association whose primary federal regulator is the OCC, and CBPA, a Pennsylvania-chartered savings bank regulated by the Department of Banking of the Commonwealth of Pennsylvania and supervised by the FDIC as its primary federal regulator. Under the U.S. Basel III capital framework the Company and its banking subsidiaries must meet specific minimum requirements for the following ratios: (1) common equity tier 1 capital; (2) tier 1 capital; (3) total capital; and (4) tier 1 leverage. In addition, the Company must not be subject to a written agreement, order or capital directive with any of its regulators. Failure to meet minimum capital requirements can result in the initiation of certain actions that, if undertaken, could have a material effect on the Company’s Consolidated Financial Statements.

The following table presents the Company’s capital and capital ratios under Basel III Transitional rules as of December 31, 2016 and 2015, respectively. Certain Basel III requirements are subject to phase-in through 2019, which are used in this report of actual regulatory ratios. In addition, the Company has declared itself as an “AOCI opt-out” institution, which means the Company is not required to recognize within regulatory capital the impacts of net unrealized gains and losses included within AOCI for available for sale securities, accumulated net gains and losses on cash-flow hedges, net gains and losses on certain defined benefit pension plan assets, and net unrealized gains and losses on securities held to maturity.

	Transitional Basel III
									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as Well-capitalized(6)
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2016
Common equity tier 1 capital (1) (5)		$13,822	11.2	%		$6,348	5.125	%		$8,051	6.5	%
Tier 1 capital (2) (5)	14,069		11.4		8,206		6.625		9,909		8.0
Total capital (3)(5)	17,347		14.0		10,683		8.625		12,386		10.0
Tier 1 leverage (4)	14,069		9.9		5,667		4.000		7,084		5.0
As of December 31, 2015
Common equity tier 1 capital (1)		$13,389	11.7	%		$5,134	4.5	%		$7,415	6.5	%
Tier 1 capital (2)	13,636		12.0		6,845		6.0		9,127		8.0
Total capital (3)	17,505		15.3		9,127		8.0		11,408		10.0
Tier 1 leverage (4)	13,636		10.5		5,218		4.0		6,523		5.0

⁽¹⁾ “Common equity tier 1 capital ratio” represents CET1 capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” for 2016 includes capital conservation buffer of 0.625%.

⁽⁶⁾ Presented for informational purposes. Prompt corrective action provisions apply only to insured depository institutions-in our case CBNA and CBPA.

Under the Capital Plan Rule, the Company may only make capital distributions, including payment of dividends, in accordance with a capital plan that has been reviewed by the Federal Reserve and to which the Federal Reserve has not objected.

In April 2016, the Company submitted its 2016 Capital Plan to the Federal Reserve under the annual CCAR process. On June 29, 2016, the FRBG indicated that it did not object to the Company’s 2016 Capital Plan or to its proposed capital actions in the period beginning July 1, 2016 and ending June 30, 2017. The Company’s 2016 Capital Plan includes quarterly common dividends of $0.12 per share through the end of 2016, a 17% increase to quarterly common dividends to $0.14 per share in 2017, and a share repurchase plan of up to $690 million through the second quarter of 2017. All future distributions are subject to consideration and approval by CFG’s Board of Directors prior to execution. The timing and exact amount of dividends and share repurchases will depend on various factors, including CFG’s capital position, financial performance and market conditions.

On January 30, 2017, the FRB published a final rule that modifies the CCAR Capital Plan and stress test rules. Under the final rule, the Company continues to be classified as a large non-complex firm, with total consolidated assets of at least $50 billion but less than $250 billion and nonbank assets of less than $75 billion. As such, the FRB may no longer object to our capital plans on qualitative grounds beginning with the 2017 CCAR and DFAST cycle. Assessment of the Company’s capital planning processes is now incorporated into regular ongoing supervisory activities. The Company remains subject to assessment of its ability to meet capital requirements under stress.

For the year ended December 31, 2016, the Company paid total common dividends of $241 million, repurchased 17.3 million shares of its common stock and $625 million of qualified subordinated notes, compared to $214 million in common dividends paid, repurchase of 20.1 million shares and $750 million of qualified subordinated notes for the year endedDecember 31, 2015. Additionally, for the year endedDecember 31, 2016, the Company paid total preferred dividends of $14 million, compared to $7 million in the year endedDecember 31, 2015.

In accordance with federal and state banking regulations, dividends paid by the Company’s banking subsidiaries to the Company itself are generally limited to the retained earnings of the respective banking subsidiaries unless specifically approved by the appropriate bank regulator.

A financial subsidiary of a national bank is permitted to engage in a broader range of activities, similar to those of a financial holding company, than those permissible for a national bank itself. CBNA has two financial subsidiaries, Citizens Securities, Inc., a registered broker-dealer, and RBS Citizens Insurance Agency, Inc., a dormant entity. On March 13, 2014, the OCC determined that CBNA no longer met the conditions to own a financial subsidiary - namely that CBNA must be both well capitalized and well managed. CBNA entered into an agreement with the OCC pursuant to which it has developed and submitted to the OCC a remediation plan setting forth the specific actions it will take to bring itself back into compliance with the conditions to own a financial subsidiary. CBNA has completed its undertakings under the plan, which have been validated by the Company’s internal audit team and submitted to the OCC for review and approval. However, until the plan has been approved by the OCC, CBNA will be subject to restrictions on its ability to acquire control or hold an interest in any new financial subsidiary and to commence new activities in any existing financial subsidiary without the prior consent of the OCC.