All but one of the 18 largest financial organizations have passed the annual Fed stress test. It was Ally Financial, whose controlling shareholder is the Ministry of Finance. The Fed disclosed the results of the check-up on March 7.
Ally is able to set aside just 1.5% in capital in case of crisis which is below the required minimum capital hurdle of 5%. However, after the data publication, the financial organization published press release where it said the regulator’s estimates were flawed.
According to the Fed, the majority of the U.S. banks will withstand under strained economic conditions. Meanwhile, the regulator has worked out a list of most fragile financial organizations, including Morgan Stanley, Bank of America, Goldman Sachs, J.P. Morgan Chase.
In particular, Goldman Sachs is said to incur a loss of $20 billion in case of financial meltdown and fall of capital adequacy to 5.8%. Nevertheless, the bank’s specialists believe the indicator will drop to 9.6%, The Financial Times reports.
Stress-tests results enable banks to sidestep Fed’s claims about capital sufficiency and use the funds for paying the dividends to the shareholders or share repurchase.
As mass media reports, the U.S. banks plan to pay record high dividends at the end of 2012. On March 6, Bloomberg said that six largest financial organizations, including Citigroup, Bank of America, JP Morgan, and Wells Fargo are to pay $14.5 billion in dividends and $26.4 billion directed for stocks buyback.
