Updated with Stifel Nicolaus analysts Christopher Mutascio's comments on the Federal Reserve's 2013 stress test scenarios.
NEW YORK ( TheStreet) -- For its next round of stress tests for the 19 largest U.S. bank holding companies, the Federal Reserve has introduced some new twists, but also thrown a gift to the banks that may face rejection of their initial plans to return capital to investors.
For the largest bank holding companies, the annual stress are called the Comprehensive Capital Analysis and Review, or CCAR.
Companies that had their initial 2012 capital plans in March rejected in full or in part, including Citigroup (C - Get Report), SunTrust (STI - Get Report) and Fifth Third Bancorp (FITB - Get Report), had to wait until August for their revised capital plans to be approved. Of the three, only Fifth Third was approved in August for a dividend boost. Neither Citi nor SunTrust requested a dividend increase or share buybacks in their revised 2012 capital plans.During the next round of stress tests, banks with capital plans rejected by the Federal Reserve will receive feedback during the stress test process and can lower their capital return plans before the Fed approves or rejects the capital plans, increasing the chances of modest -- or better -- returns of capital to investors. According to Credit Suisse analyst Craig Seigenthaler, this "one-time adjustment" option will enable banks whose initial 2012 capital returns were rejected, as well as banks like Regions Financial (RF - Get Report) and Zions Bancorporation (ZION - Get Report) -- both of which in 2012 repaid government bailout funds received in 2008 through the Troubled Assets Relief Program or TARP -- to present more aggressive plans to return capital during 2013 than previously expected. For the 2012 stress tests conducted during the first quarter, the Federal Reserve used an "Adverse Scenario" that included real U.S. GDP contracting "sharply through late 2012, with the unemployment rate reaching a peak of just over 13 percent in mid-2013," while also assuming "that U.S. equity prices
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
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
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts