The nation’s largest banks pass the annual Fed stress test The nation’s largest banks pass the annual Fed stress test – InsuranceNewsNet
The stress-test scenarios are created annually by the Fed, as well as the
The tests determine whether these banks have enough capital to withstand a significant economic downturn.
Banks affected include Bank of America Corp.,
Typically, banks disclose their dividend and stock buyback plans within weeks of obtaining Fed approval.
Current quarterly dividends are
The 34 banks collectively represent more than 80% of national banking assets.
All banks tested remained above their minimum capital requirements, despite total projected losses of
The board said the stress tests “help to ensure that big banks can support the economy in times of economic downturn.”
The tests assess the resilience of large banks by estimating their capital levels, losses, revenues and expenses under hypothetical scenarios over nine future quarters.
This year’s what-if scenario was considered by the Fed and banking analysts to be tougher than the 2021 test, by design.
The scenario included: a severe global recession with significant stress on commercial real estate (down 40%) and corporate debt markets; the unemployment rate increases by 5.75% to peak at 10% with the
For stress testing purposes, commercial real estate loans are for offices, hotels in urban areas or locations that tend to attract business travelers, shopping malls, and strip malls, depending on the
“Individual bank stress test results will feed directly into a bank’s capital requirements, requiring each bank to hold enough capital to survive a severe recession,” the Fed said.
“If a bank does not exceed its capital requirements, it is subject to automatic restrictions on capital distributions and discretionary bonus payments.”
Individual banking scenarios
Truist projected a
Bank of America expected an overall result
PNC expected an overall result
TD has projected a