Corp. and BBVA Compass Bancshares Inc. would have enough capital to absorb losses during a severe economic meltdown, according to the stress test results released today by the Federal Reserve as a requirement of the Dodd-Frank Act.
The test measures whether a large bank has the ability to remain well capitalized through a “severely adverse” economic scenario. The minimum regulatory capital requirement for Tier 1 Common capital ratio is above 5 percent.
Regions’ Tier 1 common capital ratio would fall from an actual 11 percent in the third quarter of 2013 to the minimum level of 8.8 percent in the hypothetical stress scenario.
Under severely adverse economic conditions, BBVA Compass Bancshares, the holding company of Birmingham’s BBVA Compass, would see its Tier 1 common capital ratio drop from an actual 11.6 percent to 8.5 percent during the nine quarters of the hypothetical stress scenario.
BBVA Compass is among the 12 firms with assets greater than $50 billion that were added to the stress-testing process.
All 30 participating bank holding companies, except Zions Bancorp., passed the Fed stress test. The aggregate Tier 1 common capital ratio would fall from an actual 11.5 percent to the minimum level of 7.6 percent in the severely adverse scenario.
“The largest banking institutions in the United States are collectively better positioned to continue to lend to households and businesses and to meet their financial commitments in an extremely severe economic downturn than they were five years ago,” the Fed said in a press release. “This result reflects continued broad improvement in their capital positions since the financial crisis.”
The Fed will announce the results from the annual Comprehensive Capital Analysis and Review on March 26.