2023-06-29 05:28:09
“Today’s results confirm that the banking system remains strong and resilient,” Fed Vice President for Supervision Michael Barr said in a statement.
But he stressed that the Federal Reserve must continue to work to ensure that “banks are able to face all kinds of scenarios and shocks.”
For his part, Rob Nichols, President of the American Bankers Association, said in a statement that the test results showed the resilience of US banks, pointing to the banks’ collection of reserves that allow them to continue lending “under the most severe economic conditions.”
The stress test included 23 of the major US banks, and its aim was to assess the level of their capital, the size of their losses and their returns in the event of a major downturn associated with the collapse of the real estate market and the rise in the unemployment rate to 10%.
The Federal Reserve stated that “the 23 banks will maintain liquidity that exceeds the required minimum, despite total losses estimated at $541 billion,” including $100 billion as a result of arrears in mortgage installments for homes or offices.
Such a situation will lead to a decline in the share capital ratio by 2.3 percentage points, although it will remain above 10%.
Among the banks involved in these tests are Bank of America, Citigroup, Goldman Sachs and JP Morgan Chase, in addition to the American branches of the Swiss banks Credit Suisse and UBS, which are in the process of merging.
These tests came in the wake of the banking crises in the United States and Europe earlier this year following the rapid collapse of the bank “Silicon Valley” in California.
Stress tests do not include small local banks and medium-sized regional banks, at a time when there is a discussion regarding the issue of applying the rules of prudence to this category as well in a country that counts more than 4,500 banking institutions.
© 2023 AFP
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