Sept 16 (Reuters) – Bank of America Corp said its
mid-cycle stress test showed that the bank had enough capital to
withstand a severe economic downturn.
The second-largest U.S. bank estimated its Tier 1 common
capital ratio would hit a low of 8.4 percent under the
hypothetical ‘severely adverse scenario’.
“The estimated lowest stress ratios for Tier 1 capital,
total capital and Tier 1 leverage were 9.7 percent, 12.8 percent
and 6.3 percent,” BofA said in the mid-cycle stress test results
released on Monday. ()
These ratios would exceed the minimum comparable regulatory
requirements in the stress scenario, which is characterized by
real GDP falling 4 percent over six quarters and the
unemployment rate rising to 11.7 percent.
The bank projected $26.1 billion in cumulative pre-tax loss
over the specified nine-quarter horizon under the hypothetical
stress scenario.
The Fed’s annual stress tests were mandated by the 2010
Dodd-Frank financial reform law, and are partly meant to
determine whether banks can start returning money to
shareholders in the form of dividends or share buybacks.
Bank of America shares were marginally up at $14.58 in late
afternoon trading on the New York Stock Exchange.
