Econintersect:Â The Federal Reserve Board completed the 2014 stress test with a review of the capital plans of the largest U.S. banks. Of the 30 banks that underwent the stress tests (results announced last week), 25 passed the required review and were granted acceptance of capital disbursement plans. Â The items included planned dividend payments, stock buybacks and some aspects of compensation. Â Two of the approved plans were from banks that had to resubmit amended plans in order to reach acceptance: Bank of America and Goldman Sachs.
The five banks failing to gain approval were Citigroup, HSBC North America Holdings, RBS Citizens Financial Group, Santander Holdings USA and Zions Bancorp. Zions failed to be approved because they failed to pass the minimum capital requirements in last week’s severely adverse scenario results.
At this juncture the four banks that passed the stress tests last week may submit further revisions to disbursement plans to try for approval.  Their ability to increase dividends, stock buybacks and make other capital disbursements are in limbo until such revised capital plans are approved.  Zions will be restricted from making capital disbursements increases at all because they are below the minimum required capital.
Stocks of the five banks in after hours trading Wednesday (prices compared to Tuesday close):
- Citigroup (NYSE:C): Down 5% at 47.55
- HSBC Holdings (NYSE:HSBC):Â Down 0.4% at 50.57
- RBS Citizens (NYSE:RBS):Â Down 3% at 10.00
- Zions Bancorporation (NYSE:ZION):Â Down 1% at 30.20
- Santander Holdings USA is not traded in the U.S.
Click on the cover below to access the complete Fed report (pdf):
The press release from the Federal Reserve:
Release Date: March 26, 2014
