The Federal Reserve has rejected capital plans from Citigroup due to ‘weakness in the capital planning process’ and has rejected HSBC, RBS and Santander ‘due to planning problems’.
Last week, we learned that Zions Bancorp failed because it didn’t meet minimum capital plans. Meanwhile, BOA and Goldman Sachs had to resubmit capital plans after the first set of stress test results were released.
I’ve got a feeling that the late-day (and last minute) weakness in stocks was tied to these headlines. For sure, they leaked out before the close.
USD/JPY has fallen to the lows of the day on the headlines, down to 101.89. My first take is that it’s not as big a deal as the market is making it but it’s probably too soon to buy the dip.
Update: There’s some good news as well. Morgan Stanley announces no problems with its capital plans. Doubles quarterly dividend to 10-cents and plans share repurchase of up to $10 billion.
