New Round of "Stress Tests" Will Focus on How the Nation's Largest Banks Would Handle Major Recessions in Foreign Economies
November 22 2012 - 08:20AM
Marketwired
Despite the global economy experiencing a major slowdown financial
stocks have shown investors some pretty admirable gains. The
Financial Select Sector SPDR ETF (XLF) has gained 17.5 percent
year-to-date, nearly 6 times the Dow Jones Industrial Average gain
of 3 percent over the same period. Five Star Equities examines the
outlook for companies in the Banking Industry and provides equity
research on JPMorgan Chase & Co. (NYSE: JPM) and Morgan Stanley
(NYSE: MS).
Access to the full company reports can be found at:
www.FiveStarEquities.com/JPM www.FiveStarEquities.com/MS
Last week the Federal Reserve announced guidelines for the
latest round of "stress tests," which they expect to release
results for by late by 2013. The latest tests will focus on how the
nation's 19 largest banks would handle major recessions in Europe,
China and Japan. The passing of the "stress tests" are considered
key as it enables large banks to increase dividends and share
buybacks.
"For the majority of banks, we view the scenarios laid out for
[the capital analysis and review for] 2013 as modestly more
optimistic as the one used in 2012," Barclays analyst Jason
Goldberg said. There will be a number of banks that "will return
the majority of their 2013 net income to shareholders in dividends
and buyback next year," he said.
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The company has recently announced finance executive Marianne
Lake will replace Doug Braunstein as Chief Financial Officer. Lake
was formerly head of the bank's consumer unit. "There's been a lot
of change recently, somewhat driven by the Whale, but that's life,
and we tried to do the right thing there and we're doing fine," CEO
Jamie Dimon said in an interview. He now believes that the
management overhaul is "basically done."
Bloomberg has recently reported that Morgan Stanley is close to
completing a $1 billion deal for a Moscow shopping mall, which
would become the second retail property purchased in Russia this
year. "The whole Russian story is about growing incomes," said
Cushman & Wakefield Inc. Maxim Karbasnikoff, who is in charge
of retail services in Russia. "There's been very little supply in a
consumer market that's booming."
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