This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

'Stress Test' Preview: U.S. Bank Problem List

Stocks in this article: BACCWFC

U.S. controlled large bank holding companies with Texas ratios exceeding 20% included Citigroup (C), Wells Fargo (WFC), SunTrust (STI), Fifth Third (FITB), Marshall & Ilsley (MI) and Huntington Bancshares (HBAN).

Citi on Friday reached an agreement with the government to convert up to $25 billion in preferred shares issued to the Treasury into common stock. This will significantly boost Citi's tangible common equity ratio, but no matter how high the tangible equity ratio gets after the move, the stake of the company held by non-government shareholders hasn't changed.

Citi also announced it would offer to convert roughly $27.5 billion in preferred and trust-preferred shares sold to other investors. But since the company also announced it was suspending dividends on those securities, preferred shareholders might be facing a very difficult decision.

Foreign-controlled Holding Companies

Four of the 19 U.S. holding companies with over $100 billion that filed Dec. consolidated financial statements with the Federal Reserve were foreign-owned, and three of those had critically low levels of capital as of Dec. 31.

The Treasury's documentation on the CAP stipulated that financial institutions "controlled by a foreign entity" were not eligible for assistance. A call to the Treasury Department requesting clarification was not returned.

Two of the foreign-owned companies had negative capital ratios as of Dec. 31, but the U.S. banks held by the holding companies were well capitalized.

Taunus Corp. is controlled by Deutsche Bank AG (DB). Taunus holds Deutsche BankTrust Company Americas, which had tier-1 leverage and total risk-based capital ratios of 16.58% and 35.98% as of Dec. 31. These ratios need to be at least 5% and 10% for a bank to be considered well-capitalized. Taunus also holds Deutsche Bank Trust Company Delaware, which had tier-1 leverage and risk-based capital ratios of 39.45% and 47.77$ as of Dec. 31.

TD BankNorth Inc., controlled by Toronto-Dominion Bank (TD), holds TD Bank NA, which had tier-1 leverage and total risk-based capital ratios of 6.81% and 10.77% as of Dec. 31. BankNorth USA, NA had tier-1 leverage and total risk-based capital ratios of 5.84% and 58.90%.

Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.
2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs