Goldman Sachs appeals to the Federal Reserve for capital increase after stress test
Goldman Sachs has appealed to the Federal Reserve, questioning the stress test results and may request an increase in capital reserves. The stress test showed that Goldman Sachs had a higher loss rate, leading to an additional 94 basis points of stress capital buffer. Goldman Sachs will communicate with regulatory agencies to understand the reasons for the increase
According to the latest information from the Wall Street Journal, Goldman Sachs Group (GS.US) has appealed to the Federal Reserve regarding the recent stress test results, questioning the outcome that may require Goldman Sachs to increase its capital reserves. The annual "stress test" conducted by the Federal Reserve last month revealed that several major U.S. banks have sufficient capital to withstand severe economic and market turmoil. However, due to higher portfolio risks, these banks may face larger hypothetical losses this year.
Among the banks participating in the stress test, the overall loss rate for existing credit card loans is 17.6%, with Goldman Sachs having a notably high loss rate of 25.4%. Additionally, Goldman Sachs saw the largest increase in Stress Capital Buffer (SCB) among all banks, rising by 94 basis points.
The Stress Capital Buffer (SCB) is an additional capital buffer required by the Federal Reserve for banks to withstand assumed economic downturns. A bank's performance in stress tests directly impacts the size of its SCB.
Both the Federal Reserve and Goldman Sachs have not commented on the above report. Goldman Sachs stated that they will communicate with regulatory authorities to gain a deeper understanding of the reasons behind the growth in their SCB.
Goldman Sachs CEO David Solomon mentioned in a statement last month that the growth in SCB does not seem to reflect the strategic evolution of the company's business and the continuous progress made in reducing stress loss intensity