NEW YORK (TheStreet) -- Although Citigroup (C - Get Report) passed the first round of stress tests (called the Dodd-Frank Act Stress Tests), the Big Four bank failed to impress in the second round announced Wednesday.
The bank met the capital requirements with Tier 1 common ratio at more than 5% (first round of stress testing), and review of quantitative charts of the Fed's report showed adequate ratios on the capital requirements with a proposed capital plan including dividends and share buybacks in the second round of tests (see table below).
According to the Federal Reserve's comments from its report, the central bank objected to Citigroup's capital plan (dividend increases and share buybacks) based on qualitative concerns. The wording the Fed used was: "significantly heightened supervisory expectations for the largest and most complex Bank Holding Company (BHCs) in all aspects of capital planning."
The Federal Reserve also had concerns about Citigroup's ability "to project revenues and losses under a stressful scenario for material parts of the firm's global operations and its ability to develop scenarios for its internal stress testing that adequately reflects its full range business activities and exposures."
|Bank||Federal Reserve Tier 1 Results||FY 2013 Performance|
|Common Equity Ratio1 "DFAST"||Common Equity Ratio1 "CCAR"||Risk-Based Capital Ratio1 "CCAR"||
Leverage Ratio1 "CCAR"
Adj. NPL to Loans %2
|Revenue Growth %2||Net Income Growth %2|
|JPMorgan Chase (JPM)||6.3%||5.5%||6.6%||4.2%||1.93%||-1.1%||-15.8%|
|Bank of America (BAC)||5.9%||5.3%||6.3%||4.1%||2.39%||6.7%||172.9%|
|Wells Fargo (WFC)||8.2%||6.1%||6.9%||5.6%||2.34%||-2.7%||14.7%|
Citigroup has 30 days to resubmit another plan while addressing the Fed's operational concerns or it can choose not to contest the results and wait until next year to work on the risk concerns addressed in the report.
|Bank||Proposed Dividend (per share)||Proposed Share Buybacks $ ( in bil)||Current Dividend (per share)||Current Share Buybacks $ (in bil)|
|JPMorgan Chase (JPM)||$0.40||$6.50||$0.38||X|
|Bank of America (BAC)||0.05||4.00||0.01||X|
|Wells Fargo (WFC)||0.35||0.35||0.30||X|
|Bank||Foreign Deposit %||Foreign Loan %||Foreign % of Net Income||Original TARP $ (in bil)||Assets Guaranteed $ (in bil)|
|JPMorgan Chase (JPM)||24%||17%||43%||25.0||118.0|
|Wells Fargo (WFC)||9%||3%||1%||25.0||X|
|Bank of America (BAC)||7%||12%||0%||45.0||X|
Note: Bank of America and Goldman Sachs (GS) had to modify their plans to be accepted.