Yahoo Finance
Federal Reserve is due to release the results of its annual bank health checks on Wednesday at 4:00 p.m.
Under the "stress test" exercise, the Fed tests big banks' balance sheets against a hypothetical scenario of a severe economic downturn, the elements of which change annually.
Usually, the results are a big deal because they dictate how much capital those banks need to set aside to be healthy, and how much they can return to shareholders via share buybacks and dividends.
Coming amid a sweeping overhaul of capital rules led by President Donald Trump's bank regulators, this year's tests will not change capital levels, although they will still offer insight into the health of the banking system.
The Fed established the tests following the 2007-2009 financial crisis as a tool to ensure banks could withstand a similar shock in future.
The tests formally began in 2011, and large lenders initially struggled to earn passing grades.
Citigroup (C.N), Bank of America (BAC.N), JPMorgan Chase & Co (JPM.N), and Goldman Sachs Group (GS.N), for example, had to adjust their capital plans to address the Fed's concerns.
subsidiary failed in 2015, 2016 and 2018.
However, years of practice have made banks more adept at the tests and the Fed also has made the tests more transparent.
It ended much of the drama of the tests by scrapping the "pass-fail" model in 2020 and introducing a more nuanced, bank-specific capital regime.
The test assesses whether banks would stay above the required 4.5% minimum capital ratio - which represents the percentage of its capital relative to assets - during the hypothetical downturn.
Banks that perform strongly typically stay well above that.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
Comments
Post a Comment