Sept 16 (Reuters) - Wells Fargo & Co is sufficiently capitalized to weather a hypothetical ‘severely adverse scenario’, the bank’s mid-cycle stress test results showed.
The bank’s projected pro forma Tier 1 common equity ratio, under Basel I, fell to a low of 9.9 percent during the nine-quarter period through June 30, 2015.
The fourth-largest U.S. bank’s severely adverse scenario assumes an intense recession in the United States due to extreme fiscal tightening domestically and a deep global recession, the company said in a disclosure on its website on Monday. ()
Wells Fargo projects a minimum Tier 1 risk-based capital ratio of 11.3 percent and minimum Tier 1 leverage ratio of 9 percent during the stress scenario.
The capital ratios are well above the minimum regulatory requirements mandated by the Federal Reserve.
The bank estimated a cumulative pro-forma net loss of $3.8 billion before taxes for the nine-quarter test horizon.
Wells Fargo shares closed up 1.6 percent at $42.89 on the New York Stock Exchange.