Monday, September 16, 2013

Bank of America releases 'mid-cycle' stress test results

 In a major, hypothetical downturn, Bank of America could incur $26.1 billion in losses over nine quarters but remain above capital levels required by regulators, the bank said Monday.

The Charlotte-based bank released the findings as part of so called "mid-cycle" stress tests that the biggest U.S. banks must conduct. The tests are required under the Dodd-Frank Act.

Other major banks, including Wells Fargo, also released results Monday.

Bank of America, the second-largest U.S. bank by assets, said its Tier 1 common capital ratio would drop as low as 8.4 percent in the "severely adverse" scenario that includes a global recession. That's above the minimum of 5 percent required by regulators. Its other capital ratios would also top the required minimums.

San Francisco-based Wells Fargo also said that its capital ratios would remain above required minimums over nine quarters. It said its Tier 1 common ratio could dip to as low as 9.9 percent. Wells, the fourth-largest U.S. bank by assets, estimated it could have a net loss of $3.8 billion.

Since the financial crisis, the nation's largest banks have been subject to yearly "stress tests" that are meant to check whether a bank would be able to withstand another substantial downturn in the economy. This is the first year that they have been required to test themselves in the middle of the year.

In the mid-cycle tests, the banks are allowed to craft their own scenario to gauge how they'd fare. Bank of America said its scenario was based on the U.S. economy "falling into a deep six-quarter recession followed by a sluggish recovery and accompanied by a global recession."

Also Monday, Citigroup Inc., the third-largest U.S. bank by assets, released its mid-cycle stress test results. It said it could have $21.2 billion in losses over nine quarters in a hypothetical downturn running through the second quarter of 2015.



Anonymous said...

Both Citibank and Bank of America are probably lying about their stress tests that THEY conducted on themselves. These are two of the WORST banks in America. Both seem to think that there is another recession looming in the distant future. Down with both of these banks. Bank of America and Citibank are both "crooks." When they get caught with their hands in the "cookie jar" they both try to find excuses.