| WASHINGTON, March 29
WASHINGTON, March 29 The Federal Reserve on
Saturday said it was reviewing the procedures of a closely
watched exam banks must pass each year to prove their robustness
after it had to correct the results.
The U.S. central bank, which regards these so-called stress
tests as an increasingly important tool in safeguarding the
health of the financial industry after the crisis, could tweak
its procedures as a result, a spokeswoman said.
"We are looking at how the error happened and prevent it
from happening again," the spokeswoman said.
The Fed on Wednesday rejected Citigroup's plans for a
higher payout to shareholders because of the outcome of the
tests, the second time in three years that the bank has failed
to win the Fed's approval for its plans.
It was a setback for Chief Executive Michael Corbat, who has
been working to repair Citi's relationship with regulators since
taking the job late in 2012, and the bank's shares fell more
than 5 percent after the news.
On March 21, the Fed had to change the results for a number
of the 30 banks in the annual health check, which simulates the
onslaught of a crisis as big as the 2007-09 credit meltdown, one
day after it posted the results.
The correction did however not lead to a revision of who had
passed the exam, and most of the banks either had no change in
their capital ratios under stress, or at most a 0.1 percentage
The Fed said the ratios were adjusted due to inconsistencies
in the way the tests handled capital actions in the fourth
quarter of 2013 and assumptions about compensation-related
A review of the process happened every year, the spokeswoman
added. The news was first reported by The Wall Street Journal.
(Editing by James Dalgleish)