WASHINGTON, June 26 (Reuters) – Big U.S. lenders are expected to show they have ample capital to weather any fresh turmoil in the banking sector during this week’s Federal Reserve health checks, although resulting investor payouts are likely to dip slightly, analysts said.
The central bank on Wednesday will release the results of its bank “stress tests” which assess how much capital banks would need to withstand a severe economic downturn.
The annual exercise, introduced following the 2007-2009 financial crisis, is integral to banks’ capital planning, dictating how much cash they can return to shareholders via dividends and share buybacks.
The 2023 tests come in the wake of this year’s banking crisis in which Silicon Valley Bank and two other lenders failed. They found themselves on the wrong end of Fed interest rate hikes, suffering large unrealized losses on their U.S. Treasury bond holdings which spooked uninsured depositors.
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Source: www.reuters.com
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