February 10, 2022
Federal Reserve Board releases hypothetical scenarios for its 2022 bank stress tests
For release at 4:00 p.m. EST
The Federal Reserve Board on Thursday released the hypothetical scenarios for its annual bank stress tests, which help ensure that large banks are able to lend to households and businesses even in a severe recession. This year, 34 large banks will be tested against a severe global recession with heightened stress in commercial real estate and corporate debt markets.
The Board's stress tests evaluate the resilience of large banks by estimating losses, net revenue, and capital levels—which provide a cushion against losses—under hypothetical recession scenarios that extend more than two years into the future. The scenarios are not forecasts.
In the 2022 stress test scenario, the U.S. unemployment rate rises 5 3/4 percentage points to a peak of 10 percent over two years. The large increase in the unemployment rate is accompanied by a 40 percent decline in commercial real estate prices, widening corporate bond spreads, and a collapse in asset prices, including increased market volatility.
In addition to the hypothetical scenario, banks with large trading operations will be tested against a global market shock component that primarily stresses their trading positions. Moreover, banks with substantial trading or custodial operations will be tested against the default of their largest counterparty.
The table below shows the components of the test that apply to each bank, based on data as of September 30, 2021.
| Bank | Subject to global market shock | Subject to counterparty default |
|---|---|---|
| Ally Financial Inc. | ||
| American Express Company | ||
| Bank of America Corporation | X | X |
| The Bank of New York Mellon Corporation | X | |
| Barclays US LLC | X | X |
| BMO Financial Corp. | ||
| BNP Paribas USA, Inc. | ||
| Capital One Financial Corporation | ||
| The Charles Schwab Corporation | ||
| Citigroup Inc. | X | X |
| Citizens Financial Group, Inc. | ||
| Credit Suisse Holdings (USA), Inc. | X | X |
| DB USA Corporation | X | X |
| Discover Financial Services | ||
| Fifth Third Bancorp | ||
| The Goldman Sachs Group, Inc. | X | X |
| HSBC North America Holdings Inc. | X | X |
| Huntington Bancshares Incorporated | ||
| JPMorgan Chase & Co. | X | X |
| KeyCorp | ||
| M&T Bank Corporation | ||
| Morgan Stanley | X | X |
| MUFG Americas Holdings Corporation | ||
| Northern Trust Corporation | ||
| The PNC Financial Services Group, Inc. | ||
| RBC US Group Holdings LLC | ||
| Regions Financial Corporation | ||
| Santander Holdings USA, Inc. | ||
| State Street Corporation | X | |
| TD Group US Holdings LLC | ||
| Truist Financial Corporation | ||
| UBS Americas Holding LLC | ||
| U.S. Bancorp | ||
| Wells Fargo & Company | X | X |
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