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Fed Corrects Loss Estimates for Citigroup in Stress Tests

Published: March 17, 2012 | 9:52 am
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The Federal Reserve corrected errors in loan-loss estimates for banks and financial firms including Citigroup Inc. (C) in a stress test of capital under a hypothetical economic slump.
The revised calculations don’t affect capital ratios that determined whether the banks passed the tests, the Fed said yesterday in a statement. In Citigroup’s test, an estimate for losses on first-lien mortgages in a stressed scenario was decreased by $400 million to $8.9 billion, while the estimate for losses on other loans was increased by the same amount to $4.8 billion.
The Fed required financial firms with more than $50 billion in assets to submit capital plans that would demonstrate whether the industry can withstand another crisis. Banks deemed strong enough were cleared to raise dividends and buy back shares.
Citigroup was among four firms that had plans rejected March 13 after the central bank estimated that, under the bank’s proposal, it might fall short of requirements in a stressed scenario. The New York-based company said it plans to submit a revised plan later this year.

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