There has been a lot of noise going around off stress tests and all for the past few days.. SO then what happens from here ? what if they fail the test ? will it have a lasting effect on the current surge in stock prices.
What is this bank stress test all about ?
Its basically a test of the Big american banks to see how they are faring and the results are in .The nation’s biggest banks are regaining their health, but some need to replenish their coffers to withstand any new difficulties, the government said in an upbeat report Thursday.
The Federal Reserve’s highly anticipated "stress tests" found that 10 of the 19 largest banks needed to bolster their capital by a combined $75 billion. Most of that must be raised by two banks with a large California presence — Bank of America Corp. and Wells Fargo & Co. — highlighting the role of the state’s housing market meltdown in the recession.
The Fed led the stress-test process, which applied to U.S. banks with total assets of more than $100 billion. Geithner said the results "bring a level of disclosure that goes well beyond what you typically see
Well what about the australian Banks ?
There does not seem to be much stress here with our australian banks bringing in nice profits , but offcourse setting aside some for bad debts which was expected anyways.
Westpac, Commonwealth Bank, ANZ and National Australia Bank generated a combined $8.83 billion profit in the first half of their financial years, compared with $9.27 billion the year before.
They reported bad debt impairments of $6.5 billion, the highest figure since the recession in the early 1990s.
And all four said defaults among businesses had weighed on their profits and warned that personal borrowers faced a similar threat in coming months.
Three of the big banks reduced their dividend payouts in a bid to conserve cash to buffer their balance sheets in strained lending markets.
CBA, the country’s biggest lender, improved its profit by nine per cent, although its reporting period finished in December, three months earlier than the other banks.