Fed: US banks failed – Financieele Dagblad (Registration)

US banks, there are robust for. That concludes the Federal Reserve in the first round results of its annual stress tests that Thursday after the close of Wall Street were announced. It is the first time since the introduction of stress tests by the Fed in 2009 that all major US banks have succeeded.

The Fed has 31 banks with assets greater than € 50 billion examined in two fundamental aspects. First, we looked at whether the banks have sufficient capital to absorb losses in an emergency scenario with 10% unemployment, a 25% decrease in house prices and a stock market crash of 60%. The Fed assesses whether banks nine quarters survive wind.

Assessing

We also examined whether the banks have good internal control processes for forecasting and assessing potential risks. For investors is that the second central part because the Fed faults may prevent a distribution to investors. Only on Wednesday, March 11th, the Fed will publish these results. Must also prove that banks may pay dividends.

The two rounds give banks the opportunity to save face. If a bank in the first result in specific areas criticism has to endure, may decide to adjust the dividend plans yet for the final decision a week later. Last year applied Bank of America and Goldman Sachs their plans for that reason.

rebuffed

Last year, the US Citigroup was rebuffed with its plan to repurchase shares and pay dividends while it had made adequate buffers. CEO Michael Corbat Citigroup has told to resign if the bank collapses again at this point.

The European banks HSBC, RBS and Santander were last year after the stress test of the Fed similar restrictions imposed because of poor risk management. Deutsche Bank this year for the first time submitted to the US examination.

Europe

The European Banking Authority (EBA), this year does not scale stress tests of financial institutions. Banks books in Europe progress in strengthening their balance sheets. In Europe, the less easy to quantify variables such as risk management and supervision are not considered in the tests.

US banks books six years after the crisis and the rescue by the government after tough austerity operations record profits. In the financial crisis of 2008 showed that the banks’ lack of capital persisted to absorb excessive force. Taxpayers had to rescue billions of dollars of capital injection to prevent new failures after Lehman Brothers.