Big Banks Pass Fed’s Stress Test, Setting Stage for Payouts (1)

A group of large US banks comfortably cleared the Federal Reserve’s annual stress test, setting the stage for lenders to boost buybacks and dividends for shareholders.

The 22 banks subjected to this year’s test all remained above minimum capital levels in a hypothetical recession. The lenders would withstand more than $550 billion in losses, with the results showing that “large banks are well positioned to weather a severe recession,” the regulator said in a statement.

The Fed estimated that the group of banks’ common equity tier 1 capital ratio — which provides a cushion against losses — declined 1.8 ...