Everyone’s being curious about the results yet to be launched by the Federal Reserve for the bank pressure test of the current month and of the Comprehensive Capital Analysis & Review (CCAR). Stakeholders of the outside banks including the investors and analysts would take future commitments and movements in particular hoards to their closures.
Due to no complaints to the financial scheme of bank 2014, deductions for Comprehensive Capital Analysis & Review were made with the success of Wells Fargo & Co. (NYSE:WFC) in the test the previous year. After this success Wells Fargo & Co. (NYSE:WFC) announced the increment of the premium by 16.7% to 35% per share. The idea involved the addition of 250 million buy backs.
John Stumpf, the Chief Executive Officer of Wells Fargo & Co. (NYSE:WFC) cited that no complaints from the payment scheme of 2014, as reported by the Federal Reserve Board, helps in carrying on the rebuying service and to add up in the stock amount. This would help the shareholders to earn more and to sustain their big financial level.
This tension test was initiated by Federal Reserve as a consequence of the economic crises faced in 2008 to 2009. The major goal of conducting the test was to assure a strong financial condition of the banks for outliving any economic crises situation. For this purpose banks are trained to live through any worried situation and for that a central bank makes such scenario for others. Federal Reserve makes a test on the basis of qualitative and quantitative surveys. This requires a proof that each bank has a strong wealthy support for them to survive any bad condition and to head any risk level. Federal Reserve asks the banks with property of worth $50 billion to submit an economy scheme for the whole year. It permits them to increase their share prices and profits by supervising the plan of share buyback on the condition if they get approved on the first place.
It is predicted that Wells Fargo & Co. (NYSE:WFC) will succeed the test as it has already added a property of $137 billion, which shows 10% of the entire banking system in fourth quarter of the fiscal year 2014, as cited by Federal Deposit Insurance Corp.
Federal Reserve has its focus on qualitative parts as well in the yearly conducted tests. All banks are expected to have a strong backbone in order to manage risk conditions. A small number of banks couldn’t come up with the standard in qualitative part of the test in the past year. These unsuccessful banks were Citigroup Inc. (NYSE:C), Royal Bank of Scotland Group (NYSE:RBS), HSBC Holdings Plc. 9ADR) (NYSE:HSBC) and Banco Santander, S.A. (ADR) (NYSE:SAN).
Federal Reserve stated for the Citigroup Inc. (NYSE:C) that their economy scheme was very inadequate and had a lot of imperfections in their financial scheme execution. Improvements in the flaws pointed previously by the management were also not enough.
