Jun. 27 at 10:12 PM
US banks pass the stress test
Under its “severely adverse” scenario, in which unemployment surges to 10%, the 22 banks, would lose more than
$500B (
$158B in credit card losses,
$124B in loan losses &
$52B in commercial real estate)
All 22 banks tested remained above their minimum common equity tier 1 (CET1) capital requirements during the hypothetical severe recession scenario. The aggregate decline in the CET1 capital ratio was just 1.8 percentage points, smaller than declines observed in recent years.
The banks are required to wait until Tuesday to provide an update on what they expect their new capital requirement to be - higher dividends and/or buybacks.
The lender with the biggest fall in its capital due to the theoretical stress was
$DB US operation, which had a hypothetical decline of more than 12%, based on the averaged results of the last 2 tests. The next largest falls were at the US subsidiaries of
$UBS &
$RY
$XLF