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- Big Wall street banks results in the first round of stress tests in the US
Big Wall street banks results in the first round of stress tests in the US
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Loading...During the first round of stress tests this year, 34 of the largest banks in the US managed to pass them successfully. Surveys show whether creditors with more than $50 billion. Assets can withstand a hypothetical global recession in which unemployment reaches 10% by the third quarter of 2018, and the stock market is corrected by 50% by the end of the current year.
Overall, the results show that the banking sector is well capitalized and most banks maintain significant capital reserves for such scenarios. However, some of the banks have reached the minimum level of required capital reserves, including even leaders such as Goldman Sachs and Morgan Stanley.
According to large banks this year's stress test of banks has been one of the worst in the last few years. On the other hand, the Fed says that in the worst case scenario, banks would lose nearly $383 billion.
The Fed said some banks have been able to pass the tests since yesterday just because there are no downside scenarios below the minimum withdrawal levels of customers. This scenario will be played on the next stress test on June 28, and it is likely that some banks that have passed the test next week will fail.
The New York-based Goldman Sachs came close to the minimum leverage requirement of 3%, reaching a level of 4.1%. Morgan Stanley performed worse than Goldman and reached 3.8%.
Passing some banking institutions successfully through one of the stress tests does not mean that next week this will be the case. The second round of tests will also assess quality standards, such as whether the bank has a robust set of risk management systems. Only the 13 largest banks are subject to a qualitative review this year, while the 21 smaller banks are released.
Investors will turn their attention to the second stage of stress tests next Wednesday, June 28, and in the event of bad performance by some of the big banks, we may see a decline in the financial sector in the market. If the results are very poor, it is likely to have a strong negative impact on the indices. Pressure may also be on the dollar.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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