Jan 28 U.S. regulators will release on March 7 the results of tests to determine how big banks would weather a financial shock, and they will put out evaluations of the largest banks' capital plans the following week, the Federal Reserve said on Monday.
the 2010 Dodd-Frank financial oversight law required stress tests to ensure that banks have big enough capital cushions to survive a severe recession or other economic jolt.
Banks with more than $50 billion in assets were required to go through the tests this year. In the toughest hypothetical economic scenario used, U.S. unemployment would spike up to about 12 percent, Europe and Japan would see recessions, and economic activity in China would weaken sharply.
The Fed will first release the results of the Dodd-Frank tests, which assume no changes in dividend payments and no common stock repurchases to make it easier to compare the results from different firms.
The Fed also will evaluate whether the largest bank holding companies' individual capital plans are sufficient to survive a financial shock. Those results will be released on March 14, the Fed said.
Banks will get one chance to adjust their plans to repurchase stock or boost dividends before the Fed releases its final capital plan assessment.
Last year, the Fed turned down Citigroup Inc's plan to return capital to shareholders. The firm had been expected to be able to raise its quarterly dividend.
The Fed also released on Monday details of a global market shock that will be used in tests of six bank holding companies with large trading operations. Those banks are Citigroup, Bank of America Corp, Goldman Sachs Group Inc, JPMorgan Chase & Co, Morgan Stanley and Wells Fargo & Co.