Regulators could also adopt a more stringent treatment of deferred tax asset arising from stressed losses, "effectively removing the tax shield for some banks and making stressed losses a one-for-one hit to capital."
"Regulators could also reduce capital deployment through the qualitative aspect of the stress test, something that remains difficult to handicap," the analysts add.
Morgan Stanley (MS) also screens well, but the analysts expect the investment bank to prioritize completing the acquisition of Morgan Stanley Smith Barney.In addition, the analysts also include banks with the highest "margin of error"- banks that could afford to see their loan losses increase 50% or operating profit drop 50%, maintain a payout ratio of 50% and still maintain a common capital of 5.5%. American Express (AXP), Citigroup, KeyCorp, Morgan Stanley and all the trust banks meet this criteria. -- Written by Shanthi Bharatwaj in New York
>To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk. >To submit a news tip, send an email to: firstname.lastname@example.org.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV