26 Mar 2014
FED approves capital plans for 25 banks, rejects Citigroup’s
FXStreet (Córdoba) - The Federal Reserve approved the capital plans for 25 commercial banks, that includes Wells Fargo, JP Morgan Chase and Morgan Stanley; also Goldman Sachs Group and Bank of America plans met minimum capital requirements but after submitting adjustments. The central bank rejected plans from 5 banks, four of them, that includes Citigroup, HSBC North America and Santander Holdings USA, were objected based on qualitative concerns, while Zions Bancorporation because did not meet the minimum capital requirements.
The 30 commercial banks examined in the Comprehensive Capital Analysis and Review (CCAR), also known as stress test, have a combined $13.5 trillion in assets or approximately 80% of all US bank holding company assets according to the FED.
Key Quotes:
“When considering an institution's capital plan, the Federal Reserve considers both qualitative and quantitative factors. These include a firm's capital ratios under severe economic and financial market stress and the strength of the firm's capital planning process”.
“U.S. firms have substantially increased their capital since the first set of government stress tests in 2009. The aggregate tier 1 common equity ratio, which compares high-quality capital to risk-weighted assets, of the 30 bank holding companies in the 2014 CCAR has more than doubled from 5.5 percent in the first quarter of 2009 to 11.6 percent in the fourth quarter of 2013, reflecting an increase in tier 1 common equity of more than $511 billion to $971 billion during the same period”.
“ All but two of the 30 participants in this year's CCAR are expected to build capital from the second quarter of 2014 through the first quarter of 2015. In the aggregate, the firms are expected to distribute 40 percent less than their projected net income during the same period”.
The 30 commercial banks examined in the Comprehensive Capital Analysis and Review (CCAR), also known as stress test, have a combined $13.5 trillion in assets or approximately 80% of all US bank holding company assets according to the FED.
Key Quotes:
“When considering an institution's capital plan, the Federal Reserve considers both qualitative and quantitative factors. These include a firm's capital ratios under severe economic and financial market stress and the strength of the firm's capital planning process”.
“U.S. firms have substantially increased their capital since the first set of government stress tests in 2009. The aggregate tier 1 common equity ratio, which compares high-quality capital to risk-weighted assets, of the 30 bank holding companies in the 2014 CCAR has more than doubled from 5.5 percent in the first quarter of 2009 to 11.6 percent in the fourth quarter of 2013, reflecting an increase in tier 1 common equity of more than $511 billion to $971 billion during the same period”.
“ All but two of the 30 participants in this year's CCAR are expected to build capital from the second quarter of 2014 through the first quarter of 2015. In the aggregate, the firms are expected to distribute 40 percent less than their projected net income during the same period”.