Historically, these exams would prompt frustration and anxiety across Wall Street and the Fed would ultimately have to sign off on lenders’ capital plans. Now, the vast majority of banks pass after having become more familiar with the exercises and no longer need Fed approval as long as they stay above their established capital minimums.
“There may be more stress, but there ought to be ample excess capital to render this manageable, broadly and in the context of our expected payouts,” Credit Suisse Group AG analyst Susan Katzke wrote in a note to clients, adding that incremental stress is being driven by balance-sheet growth and less money set aside for soured loans compared to last year.
--With assistance from Shubham Saharan.
This article was provided by Bloomberg News.