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Bank Stress Test Results for 19 Banks

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bank-stress-testThe Federal Reserve, OCC, and FDIC released the results of the Supervisory Capital Assessment Program, also known as the "Bank Stress Test" for the 19 bank holding companies subjected to the stress test.

The stress test was designed as a what if exercise of how the economy might be over the next two years. The first scenario is a baseline which follows the current forecast estimates for the economy. The second scenario is a more adverse scenario with a more severe recession.



The SCAP test was designed to find out which bank holding companies (BHCs) are vulnerable today, how they would fare in the future if the economy deteriorated more and if the banks needed more capital to survive. Not only the amount of capital was considered the composition of a bank's capital was also taken into consideration.

The bank stress test was applied to 19 banks. All the banks are not in danger of failing but some need to raise more capital. Here is how the 19 banks fared.

  • American Express: No additional capital needed

  • Bank of America: Additional $33.9 billion needed

  • BB&T : No additional capital needed

  • The Bank of New York Mellon: No additional capital needed

  • Captial One Financial: No additional capital needed

  • Citigroup: Additional $5.5 billion needed

  • Fifth Third Bankcorp: Additional $1.1 billion needed

  • GAMC: Additional $11.5 billion needed

  • Goldman Sachs: No additional capital needed

  • JP Morgan Chase Bank: No additional capital needed

  • Keycorp Bank: Additional $1.8 billion needed

  • Metlife: No additional capital needed

  • Morgan Stanley: Additional $1.8 billion needed

  • PNC: Additional 0.6 billion needed

  • Regions Financial: Additional $2.5 billion needed

  • State Street: No additional capital needed

  • SunTrust Bank: Additional $2.2 billion needed

  • U.S Bankcorp: No additional capital needed

  • Wells Fargo: Additional $13.7 billion needed


The stress test results are interesting, Bank of America, Wells Fargo and GMAC are in most need of capital. Citigroup's common stock which was under a dollar last fall only needs an additional $5.5 billion. It will be interesting to see how these banks respond to the test.
 
Author: Brian McKay
May 7th, 2009