Bank of America, Citigroup Get New Stress Test Math
NEW YORK (TheStreet) -- The Federal Reserve issued revised estimates of loan-loss ratios for Citigroup(C) , Bank of America(BAC) and three other banks after the close on Friday, but said the updated calculations did not affect the estimated capital ratios under the supervisory stress scenario.
The revisions mostly seemed to have stemmed from a change in the classification of international real estate loans to the "other loans" category.
Estimates of Citigroup's loss rate on first-lien mortgages fell to 9.3% from 9.7% previously. The loss rate on junior loans and home equity declined to 18.2% from 18.5% previously. The projected losses on international real estate loans increased by $400 million to $4.8 billion, implying a loss-rate of 2.8% compared to 3.8% previously estimated.
Bank of America saw its loan-loss estimates on international real estate loans fell from 2.1% to 1.9%. There were also modest revisions to estimates of loan loss rates for international real estate loans for Wells Fargo(WFC) , Metlife(MET) and Ally Financial.
However, there was no change to the total loss levels.
Citigroup, Metlife, Ally and SunTrust(STI) were the four banks that failed to win approval for its capital deployment plans, as the Fed stress tests showed that the banks would not meet their minimum capital requirement of 5%, assuming they go ahead with its proposal.
--Written by Shanthi Bharatwaj in New York
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