Most of the big banks are on the rise after passing the Federal Reserve’s stress tests Thursday.
After the markets closed Thursday, the big banks released the effect a hypothetical extreme recession would have on their balance sheets.
The banks all passed the capital requirements required by the tests, even the most stringent test which involved a hypothetical doubling of the unemployment rate.
The banks improved versus last year’s results. Big banks would suffer $US383 billion in loan losses in the most extreme scenario, compared to $US385 billion last year.
These tests were implemented in the aftermath of the financial crisis to ensure the banks would be able to survive a similar future crisis and continue to lend even in tough times.
Even with billions of losses, the banks’ amount of high-quality capital would cover 9.2% of their risk-weighted assets, an improvement over last year’s 8.4%. The tests require banks to meet a 4.5% threshold in order to pass.
After the banks released results of the stress tests, most of their shares began rising. Here is a list of some of the biggest names…
- Bank of America (BAC) +0.68%
- Goldman Sachs (GS) -0.33%
- JPMorgan (JPM) +0.88%
- Citigroup (C) +0.74%
- Ally Financial (ALLY) +0.34%
- Key Corp (KEY) +0.38%
- Wells Fargo (WFC) +0.30%
- Credit Suisse (CS) -0.43%