Citigroup Slumps After Stress Tests While Wells Fargo Improves
The Paragon Report Provides Equity Research on Citigroup & Wells Fargo
(firmenpresse) - NEW YORK, NY -- (Marketwire) -- 03/16/12 -- Earlier this week the Federal Reserve released results of its annual stress test of 19 major U.S. banks. The test evaluates whether the banks have enough money on hand to withstand another severe economic and financial crisis. According to the Fed, the results show that the majority of the largest U.S. banks would continue to meet supervisory expectations for capital adequacy despite large projected losses "in an extremely adverse hypothetical economic scenario." The Paragon Report examines investing opportunities in the Money Center Banking Industry and provides equity research on Citigroup, Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC). Access to the full company reports can be found at:
All but four of 19 major U.S. banks got approval from the Federal Reserve to boost their dividends and take other steps that will make their stocks more attractive to investors. Reflecting the severity of the stress scenario -- which includes a peak unemployment rate of 13 percent, a 50 percent drop in equity prices, and a 21 percent decline in housing prices -- the Federal Reserve says losses at the 19 bank holding companies are estimated to total $534 billion during the nine quarters of the hypothetical stress scenario.
Overall, the financial system is much stronger than it was in 2009. In the first quarter of that year, the 19 companies stress-tested by the Fed held $420 billion in cash and assets easily convertible to cash. That figure has surged to $759 billion at the end of 2011.
The Paragon Report provides investors with an excellent first step in their due diligence by providing daily trading ideas, and consolidating the public information available on them. For more investment research on the Money Center Banking industry register with us free at and get exclusive access to our numerous stock reports and industry newsletters.
J.P. Morgan Chase, Wells Fargo and other large bank holding companies that passed the stress tests raised their dividends and announced plans to buy more of their stock. Citigroup, however, was a notable exception. The Fed said Citigroup was in danger of failing during another steep downturn, despite receiving billions in government assistance during the crisis. J.P. Morgan analyst Vivek Juneja said that failed stress test "hurts management credibility."
Juneja wrote in a note to clients that failing the test can hurt investors in a more concrete way. The failure means that the Fed didn't approve Citigroup's plan to return capital to shareholders through share buybacks or dividends.
The Paragon Report has not been compensated by any of the above-mentioned publicly traded companies. Paragon Report is compensated by other third party organizations for advertising services. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at
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Datum: 16.03.2012 - 12:20 Uhr
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News-ID 125578
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