Santander and Deutsche Bank fail US stress tests

Santander and Deutsche Bank fail US stress tests

Santander and Deutsche bank have failed “stress tests” carried out by the US Federal Reserve “on qualitative concerns”.

The Federal Reserve announced it did not object to the capital plans of 28 banks, meaning they passed the stress tests.

But it said the Bank of America is required to submit a new capital plan by the end of the third quarter “to address certain weaknesses in its capital planning processes”.

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The Comprehensive Capital Analysis and Review (CCAR) was introduced following the most recent global financial crisis.

Federal Reserve governor Daniel Tarullo said: “Our capital plan review helps ensure that the capital distribution plans of large banks will not compromise their ability to continue lending to businesses and households even during a period of serious financial stress. It also provides a structured assessment of their risk management capacities.”

In a statement, Deutsche Bank said it has hired 1,300 employees to ensure “its systems and controls are best in class”, and has hired more than 500 employees across its control functions in the US.

The Federal Reserve noted that US firms have “substantially increased” their capital since the first round of stress tests in 2009.

The 31 banking institutions tested this year represent more than 80 per cent of assets held by domestic bank holding companies, or $14trn as of the fourth quarter of 2014.