What is a little surprising is the total amount of capital regulators believe the financial system needs to raise to ensure it can survive a recession that lasts through next year: $74 billion. Some analysts have estimated a deep, long-lasting downturn could mean banks would need to raise as much as $1 trillion, many times that much.
In addition to Citi, B of A, Wells Fargo, Regions, SunTrust and Fifth Third, GMAC, Key Corp. (KEY), Morgan Stanley (MS), and PNC Financial (PNC) will need to raise additional capital, the Federal Reserve said.
American Express (AXP), Bank of New York Mellon (BK), BB&T (BBT), Capital One (COF), Goldman Sachs (GS), JPMorgan Chase (JPM), MetLife (MET), State Street (STT) and US Bancorp (USB) won't need more capital, the Fed said.
Regulators estimated the banks could suffer losses as high as $599 billion through next year if the economy deteriorates further, according to the stress tests' results.
Expect at least a few of the banks cleared today to announce plans to return the money they received under the Troubled Asset Relief Program, or TARP. JPMorgan, which received $25 billion, and Goldman Sachs, which got $10 billion, have made no secret of their desire to repay those funds soon as possible. And both have shown there's demand for their bonds in the corporate debt market, a key sign regulators want to see before letting them exit the program.
As a bond analyst with the research firm Gimme Credit wrote in a note to clients today, "Goldman Sachs and JPMorgan will get to lord their superiority over everybody else yet again."
Between the markets closing at 4 p.m. and the announcement of the stress test results an hour later, Morgan Stanley said it would sell $2 billion in stock and $3 billion in bonds and Wells Fargo said it would $6 billion in stock. The moves could help the banks meet their new capital requirements; Morgan Stanley needs to add $2 billion in capital and Wells Fargo must raise $13.7 billion.
But it isn't just the giant banks eager to prove their health by repaying the government's bailout funds. BB&T could move quickly now that the stress tests are past. The North Carolina-based regional bank has long been seen as stronger than many of its peers and it, too, has been able to sell bonds without a government guarantee.