All 23 large banks tested remained well above their risk-based minimum capital requirements and as laid out previously by the Board, the additional restrictions put in place during the COVID event will end. All large banks will be subject to the normal restrictions of the Board’s stress capital buffer, or SCB, framework.
This year’s hypothetical scenario includes a severe global recession with substantial stress in commercial real estate and corporate debt markets. The unemployment rate rises by 4 percentage points to a peak of 10-3/4 percent. Gross domestic product falls 4 percent from the fourth quarter of 2020 through the third quarter of 2022. And asset prices decline sharply, with a 55 percent decline in equity prices.
Under that scenario, the 23 large banks would collectively lose more than $470 billion, with nearly $160 billion losses from commercial real estate and corporate loans. However, their capital ratios would decline to 10.6 percent, still more than double their minimum requirements.