Why Citigroup (C) Is Up Today

NEW YORK (TheStreet) -- Citigroup (C) shares were up Friday on the news that Citi had passed the Fed's annual stress test by exceeding the minimum amount of capital needed to survive a hypothetical serious economic downturn.

"The annual stress test is one of the Federal Reserve's most important tools to gauge the resiliency of the financial sector and to help ensure that the largest firms have strong capital positions," Federal Reserve Governor Daniel K. Tarullo said. "Each year we are making substantial improvements, which have helped make the process even stronger than when we first conducted the stress tests in the midst of the financial crisis five years ago."

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Though Citigroup's Tier 1 common ratio --high quality capital as a share of risk-weighted assets -- of 7% was more than enough to pass the 5% test threshold, it was well below the 8.2% industry average.

Citigroup has come out and contested the numbers, however, saying that it believes that its ratio should be three percentage points higher than the Fed's calculations. The stress test is the first step in an evaluation process the Fed conducts to determine whether a financial firm like Citigroup can continue with proposed share buyback plans.

Citigroup shares were up 0.3% to $50.32 on Friday.

TheStreet Ratings team rates CITIGROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

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