The Marriner S. Eccles Federal Reserve building stands in Washington, D.C., U.S. (Photographer: Andrew Harrer/Bloomberg)

Wells Fargo, JPMorgan Gain as Banks Announce Capital Plans

(Bloomberg) -- Banks including Wells Fargo, JPMorgan Chase and Citigroup are extending gains in post-market trading after the Federal Reserve released stress test results showing no firms’ capital plans were objected to on quantitative grounds.

  • The Financial Selct Sector SPDR ETF, which trades under ticker XLF, gained 0.9% post-market; the fund rose 0.9% in regular trading for its first positive day after 13 sessions of losses
  • "The money centers, Citigroup, JPMorgan, and Wells Fargo were winners, led by Wells Fargo," RBC analyst Gerard Cassidy tells Bloomberg via email. "Morgan Stanley and Goldman results were less fulfilling but could have been worse."
    • Wells Fargo gained 3.7%; Citigroup was up 2.1%; JPMorgan rose 2%
  • Goldman Sachs, Morgan Stanley rebounded after declines immediately after the Fed issued "conditional non-objections" to their capital plans and each firm agreed to limit capital distributions to the levels they paid in recent years
    • Goldman Sachs shares climbed 0.7% in post-market trading; Morgan Stanley rose 0.4%
  • State Street little changed; the Fed issued a conditional non-objection to State Street’s capital plan and has "required the firm to take certain steps regarding the management and analysis of its counterparty exposures under stress"
  • DB USA Corporation failed on qualitative grounds "based on material weaknesses in capital planning"; Deutsche Bank AG shares traded in New York gained 0.6% percent
  • Results also showed banks with different stressed ratios before and after adjustments to planned capital actions include: American Express, JPMorgan, KeyCorp, M&T Bank
  • Banks had closed higher ahead of the results, with the KBW bank index (BKX) up 0.6%, the most since June 6, led by Citigroup, JPMorgan, and Bank of America; Goldman closed up 1.5%; Morgan Stanley +2.3%; State Street +0.3%
    • Earlier, analysts saw Goldman, Morgan Stanley tempering payout requests, and felt Deutsche Bank must overcome Fed concerns about firm’s controls
    • See story: From Goldman to Deutsche Bank, What to Watch in Stress Tests
  • NOTE: June 22, Goldman, Morgan Stanley Say Test Scores May Not Curb Payouts; Wells Fargo May Be Stress-Test Winner; Goldman Soothes Concern
  • See TLIV for our live blog with commentary and analysis

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