29 of 30 big banks pass Fed’s stress test

29 of 30 big banks pass Fed’s stress test
Big U.S. banks have enough capital buffers to withstand a drastic economic downturn, the Federal Reserve said Thursday, announcing that 29 out of 30 major
banks met the minimum hurdle in the Fed’s annual health check.
All of the big banks except -Zions Bancorp stayed above the 5 percent requirement for top-tier capital in the latest round of stress tests.
The tests aim to show how banks would weather a financial collapse similar to the 2007-09 crisis. Banks had to show how they would cope with a halving of the
stock market, and the eight largest banks had to weigh the impact of the default of their biggest trading counterparty.
Stress tests are closely watched by financial markets as a sign of the industry’s health, and also because the Fed can reject a bank’s plans to return
capital to shareholders if it thinks the bank is not strong enough.
The Fed will announce on March 26 which banks’ plans to pay dividends or buy back shares were approved.
Zions, based in Salt Lake City, was the only bank to miss the minimum, with a tier 1 capital ratio of 3.5 percent in the most severe stress scenario. A
spokesman for Zions was not immediately available for comment.
The other 29 banks stayed above the minimum levels. But M&T Bank came in relatively low, at 5.9 percent, and Bank of America’s tier 1 ratio was 6 percent.
Bank of New York Mellon, Discover Financial Services and State Street had the highest capital ratios. Discover announced shortly after the release of the
results that it planned to increase its quarterly dividend.