Rational Advisor

The official results of the US stress-tests on 19 of the nation’s largest financial institutions are in, and the federal government has projected that the banks could sustain losses of up to $599bn in the event that the global economy takes another leg down.

So, as a result, 10 firms are required to raise an additional $74.6bn in capital. The institutions which are required to raise additional capital will be given a month to provide the US Treasury and the Federal Reserve with their plans. The capital will need to be raised within a further 6 months. US authorities are hopeful that the firms will be able to raise the capital privately, either through new stock offerings or converting preference shares to common equity. Another alternative is to sell assets to beef up the balance sheet.

Here are the results:

American Express - no capital required

Bank of America - $33.9bn

Bank of New York Mellon - no capital required

BB&T - no capital required

Capital One Financial - no capital required

Citi - $5.5bn

Fifth Third - $1.1bn

GMAC - $11.5bn

Goldman Sachs - no capital required

JPMorgan Chase - no capital required

KeyCorp - $1.8bn

MetLife - no capital required

Morgan Stanley - $1.8bn

PNC Financial - $600m

Regions Financial - $2.5bn

State Street - no capital required

Sun Trust - $2.2bn

US Bancorp - no capital required

Wells Fargo - $13.7bn

Citi is to convert $5.5bn of preferred stock to common, Morgan Stanley is to raise $5bn by selling equity and bonds, and Wells Fargo plans a $6bn common stock offering. Bank of America has already sold $3bn of 5-year notes - without the support of the FDIC.