TFC - Fed 2023 stress test results in focus after regional bank failures
2023-06-28 06:25:25 ET
The Federal Reserve is set to release the results of its annual stress test for 23 banks on Wednesday after markets close, in the first such test since the banking crisis triggered by regional lender failures.
Regulators have been exploring more stringent requirements for banks' balance sheets in the wake of the failures of Silicon Valley Bank and two other lenders .
The stress test will show how much capital banks need in the face of a severe economic turmoil and if lenders can stay above the required 4.5% minimum capital ratio during the downturn.
Despite recent banking failures, industry experts anticipate the 23 lenders being tested will show capital in excess of regulatory minimums.
Lobby group The Bank Policy Institute expects the banks' hypothetical losses to be slightly higher this year. Average capital levels will likely fall 3.2% in 2023, compared with last year's 3% decline.
This year's test was overseen by Fed Vice Chair for Supervision Michael Barr, who believes the tests should apply multiple hypothetical scenarios. For example, this year's test reportedly included an "exploratory market shock" for the eight largest banks.
Top banks that will be closely watched include Citigroup ( C ), Bank of America ( BAC ), JPMorgan Chase ( JPM ), Goldman Sachs ( GS ), Wells Fargo ( WFC ), and Morgan Stanley ( MS ).
Participating banks include: Barclays US ( BCS ), BMO Financial ( BMO ), Capital One ( COF ), Charles Schwab ( SCHW ), Citizens Financial ( CFG ), Credit Suisse, DB USA ( DB ), M&T Bank ( MTB ), Northern Trust ( NTRS ), RBC US ( RY ), TD Group US ( TD ), Truist Financial ( TFC ), UBS Americas ( UBS ), and U.S. Bancorp ( UBS ).
A look at last year's bank stress test .
More on the stress test:
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U.S. banks to face harsher adverse scenario in Fed's 2023 stress tests
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Don't Expect Many Surprises From Fed Stress Tests, But Other Capital Changes Are Likely Coming
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Fed 2023 stress test results in focus after regional bank failures