The Fed’s bank stress test results are out, and the US-based banks passed.
But the US arms of Deutsche Bank and Santander have flunked the qualitative portion of the Federal Reserve’s stress test for the Comprehensive Capital Analysis and Review.
They will have to address deficiencies in capital planning processes, including governance and risk management.
In the US, Bank of America earned a conditional pass for its capital plan, meaning it must re-submit an improved plan by the end of September. The Fed’s statement said Bank of America has to “address certain weaknesses in its capital planning processes.”
JP Morgan Chase, Goldman Sachs and Morgan Stanley had to revise their proposals and more than a two dozen other institutions, including Citigroup, passed without additional conditions.
The second round of stress tests have been announced by the Federal Reserve, taking into account how management and directors prepared for adverse, hypothetical economic scenarios given to Wall St. banks by the US central bank in order to detemine their effectiveness and readiness for another market crisis.
The Fed announced results today after the market closed, and although all 31 banks passed the first portion of the test — proving they have adequate capital reserves on hand to thwart a major correction.