WASHINGTON (dpa-AFX) - According to the Federal Reserve (Fed), the largest financial institutions in the USA have a crisis-proof capital base. All 31 institutions tested passed the annual stress test of the financial regulators, as the Fed announced in Washington on Wednesday. Deutsche Bank and its US subsidiary also had no problems in the stress test based on simulated crisis scenarios. Each institution remained above its minimum capital requirements in a hypothetical recession, the report continued. In total, the banks would have lost 685 billion US dollars in this scenario, more than in last year's stress test. However, the proportion of Common Equity Tier 1 capital (CET 1) would only have fallen to 9.9 percent, significantly more than the 4.5 percent considered by the supervisors to be the lower limit. 31 banks with assets of at least 100 billion dollars each were tested.

The central bank's supervisors want to use the acid test to ensure that lending to companies and households does not come to an abrupt halt in the event of a financial market collapse. It is a consequence of the 2008 financial crisis and is intended to ensure that banks are prepared for emergencies and do not have to be bailed out with taxpayers' money again. This time, the Fed examined whether the capital reserves are sufficient to withstand extreme strains such as a ten percent rise in unemployment, a 40 percent slump in commercial real estate prices and a 55 percent fall in asset values. For many of the big banks, the annual review is crucial in determining whether and to what extent money can be distributed to investors through dividends or share buybacks. They are allowed to publish their capital plans from Friday afternoon (local time).

Due to the coronavirus crisis, the Fed has scrutinized the balance sheets of financial institutions particularly closely in recent years and at times imposed strict requirements to maintain cash reserves. For example, share buybacks and dividend increases were temporarily taboo or subject to strict conditions. Deutsche Bank's US business had a difficult time with the regulators in the meantime and failed the stress test several times between 2015 and 2018. Unlike its US rivals, the dividends and share buybacks of subsidiaries of foreign banks do not depend on the test result, but the profit distributions to their parent companies do./he