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| Santander and Deutsche Bank fail US 'stress tests' | Santander and Deutsche Bank fail US 'stress tests' |
| (35 minutes later) | |
| Santander and Deutsche Bank have failed a US "stress test" designed to assess whether lenders can withstand another financial crisis. | Santander and Deutsche Bank have failed a US "stress test" designed to assess whether lenders can withstand another financial crisis. |
| The review, carried out by the Federal Reserve, gauges whether the biggest banks operating in the US have the "ability to lend to households and businesses even in times of stress". | The review, carried out by the Federal Reserve, gauges whether the biggest banks operating in the US have the "ability to lend to households and businesses even in times of stress". |
| Another institution, Bank of America, has been asked to revise its financial plans due to "certain weaknesses". | Another institution, Bank of America, has been asked to revise its financial plans due to "certain weaknesses". |
| A further 28 banks passed the tests. | A further 28 banks passed the tests. |
| Officially known as the Comprehensive Capital Analysis and Review, the tests were implemented in the aftermath of the 2008 financial crisis, in which some lenders needed bailouts from the US central bank. | |
| Doomsday scenarios | |
| All banks with more than $50bn (£33.5bn) in assets are subject to the annual examinations, which assess the corporations' ability to deal with "doomsday" scenarios, such as rising unemployment and plummeting house prices. | All banks with more than $50bn (£33.5bn) in assets are subject to the annual examinations, which assess the corporations' ability to deal with "doomsday" scenarios, such as rising unemployment and plummeting house prices. |
| In previous years, banks that failed the tests were forced to suspend dividend payments to shareholders, and international lenders can be prevented from sending their earnings back to their parent companies. | |
| In a statement reacting to the Fed's announcement, Germany's Deutsche Bank said it had hired 1,800 employees "dedicated to ensuring that its systems and controls are best in class". | |
| Santander's US chief executive, Scott Powell, said the bank, which failed the Fed's tests for the second year in a row, still had "meaningful work to do to meet our regulator's expectations and our own standards of excellence". | |
| However, the Spanish bank added that it had not been prevented from paying dividends. | |
| Following news that they had passed the Fed's tests, two large US banks announced share buybacks - signalling a long-anticipated payday for investors. | |
| Citigroup will buy back $7.8bn, while Morgan Stanley will increase its dividend and buy back $3.1bn in stock. |