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Bank Stress Test Results

March 14, 2012 by staff 

Bank Stress Test Results, Most of the largest US banks passed their annual stress test, the Federal Reserve revealed in an earlier-than-expected release of the results, after JPMorgan Chase pulled the trigger on announcing its glowing marks and helped lift the stock market.

But the failing grade for Citigroup, the nation’s third-largest bank, was a substantial surprise. Going into the tests someanlysts felt it had a better chance of a positive surprise than any other financial institution.

The Fed said on Tuesday that 15 of the 19 banks tested could take a financial shock that would see unemployment hit 13% and housing prices drop 21%.

MetLife, the largest life insurer in the United States, was also among the four financial institutions that failed the exam, which applied worst-case stress scenarios looking out through the end of 2013.

Ally Financial and SunTrust were also at the bottom of the heap.

Among the winners was JPMorgan, which has been agitating for regulators to loosen the handcuffs on the ability of banks to raise dividends and buy back stock.

The Fed uses the annual stress tests to give the markets a window into the health of the US bank industry, and also determine if individual banks are strong enough to reduce their capital buffers.

JPMorgan, in a surprise to markets, announced around 3 pm EDT (1900 GMT) that the Fed had given it permission to raise its quarterly dividend by a nickel to 30 cents and buy back as much as $12 billion of stock this year.

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