Most U.S. banks hold enough capital to withstand high unemployment and loan losses although some smaller firms that are heavily exposed to commercial real estate may need a bigger cushion, the IMF said on Friday.
The International Monetary Fund said it conducted "stress tests" of the 53 largest banks in the United States to determine how well they could weather several different economic scenarios. The group included 11 foreign companies.
Under a baseline scenario that assumes the U.S. economy grows in line with IMF expectations — 3.1 percent this year and 2.6 percent next year — 12 of the 53 banks would need to raise a total of $14.2 billion of capital in order to maintain a common capital ratio of 6 percent through 2014.
Among those needing more capital, nearly all were small or regional banks, and one third were foreign. None of the four largest firms were found to be lacking.
"Our core conclusion is that the risks appear to be manageable and they do not rise to a level of systemic concern at this point," said Christopher Towe, deputy director of the IMF's monetary and capital markets department, who led the assessment.
"That said, we are particularly concerned about the situation among the small- and medium-sized banks that are most heavily exposed to the commercial real estate sector," he said.
Towe said while the figures for capital needs "were not frightening" the institutions involved were important and needed to be closely watched.
This was the IMF's first assessment of the U.S. financial system, and its first of a major economy since the financial crisis erupted two years ago.
The IMF said its own testing used only publicly available data but it had also held discussions with senior U.S. officials, including Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner.
"Lack of access to more granular supervisory data was a constraint," the Fund said.
Under an adverse scenario — which assumed full-year 2010 growth of 2.3 percent and just 0.8 percent in 2011 — 17 out of the 53 banks would need a combined total of $44.6 billion in capital in order to maintain that 6 percent common capital ratio.
Of those seen needing more capital, 11 were small and six were foreign. The IMF said foreign bank holding companies were particularly vulnerable because they tended to be "lightly capitalized."
Under the baseline scenario, they would need $26.3 billion in capital to meet the 6 percent capital ratio. But under the darker scenario, they would need $31.7 billion.
U.S. regulators last year conducted their own stress tests of 19 large firms. Following that exercise, those companies raised $205 billion in private capital.
The IMF said it added one more layer of examination that U.S. regulators had not explicitly addressed -- interdependence among financial firms.
Its study found tight linkages between U.S. and European banks, something that has become a bigger concern in recent months because of worries about European bank exposure to troubled government debt.
As of June 2010, the IMF found that if all the banks in its sample fell into distress, there would be a roughly 40 percent chance of that distress spilling over into Europe and vice versa.
It also evaluated U.S. financial reform efforts and said Washington had missed an opportunity to reduce the number of regulatory agencies responsible for oversight.
"We would've preferred to have seen a much more bold streamlining of the regulatory architecture, possibly including a merger of the responsibility for oversight of securities markets and a merger of responsibilities for bank regulation," Towe said.
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