The largest US bank has passed the second part of a difficult annual test carried out by the Central Bank to ensure the ability of the banking sector to cope with crises.
That result, adopted by the US Federal Reserve, would give impetus to White House plans to ease financial rules.
The central bank has approved banks' plans to distribute funds to shareholders and use them for other purposes, rather than being a barrier in the face of another collapse.
The central bank said the proposals would not hamper the banks' ability to act in case of a severe recession.
This is the first time in seven years that all 34 financial institutions under review have passed the second part of the annual stress test, which began after the global financial crisis in 2008.
US bank stocks rose on the financial markets, weighed down by the news that the test passed.
Citigroup shares rose more than 2 percent in trading hours after the close. The firm said yesterday it will increase dividend distribution and approve up to $ 15.6 billion in repurchase operations over the coming months.
Shares of JPMorgan Chase rose almost 2 percent, while Bank of America rose 1.3 percent and Goldman Sachs gained 1.2 percent.
Stress testing
Last week, the Fed authorized the 34 financial institutions in the first phase of the review, which examined whether these institutions had enough financial cover to absorb losses in a severe downturn.
In the second part of the review, the Federal Reserve said that banks' plans to deal with capital, including repurchase of shares and increased dividend distribution, would not hurt their ability to operate in times of crisis.
Jerome Powell, governor of the Federal Reserve, said he was pleased that the process had pushed all major financial institutions to achieve healthy levels of capital and to improve capital planning processes.
The bank asked one financial institution, Capital One Financial, to submit a new plan within six months that would address weaknesses in the capital planning process.
The regulator said the company "did not adequately take into account the potential impact of risk in one of its most important financial activities."
Source:
http://nypost.com/2017/06/28/all-banks-pass-stress-test-for-first-time-since-financial-crisis/