US Fed Will Release Bank Stress Test Results Today

JPMorgan Chase, Citigroup, Morgan Stanley and other banks will find out if the Federal Reserve thinks they can cope with the next financial crisis when it publishes the results of an annual health check on Thursday.

If the Fed finds that any of the 30 banks subject to the so-called stress tests are still at risk, the banks will then have a few days to change any plans they may have made to return capital to shareholders through dividends or share buy-backs.

Most banks are expected to pass the exam, but analysts will closely watch the results. Last year, American Express lowered its capital distribution proposal after the first submission.

And banks may have been more willing to take risks with their initial plans this year, now that they have been building up capital in the years since the crisis.

“These banks are very well capitalized and I know they’re going to want to get more aggressive each incremental year in terms of what they ask for,” said Fred Cannon, global director of research for Keefe, Bruyette and Woods.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza