U.S. banks with assets above $100 billion to be subject to tougher stress tests

Larger banks of the United States will be subject to tougher “stress tests” of the regulators which are determined to gauge their ability to withstand a deeper and longer recession than expected. These stress tests mandatory for all institutions with the assets exceeding $100 billion are aimed at identifying if the banks need more financing from the federal government.

According to the U.S. regulators the tests were "to determine if the largest US banking organizations have sufficient capital buffers to withstand the impact of an economic environment that is more challenging than is currently anticipated".

The tests will be applied to 19 largest bank holding companies in the U.S. and the procedure will be completed no later than April. Any additional capital injections would then be done in the following months.

Banks will have to select either raising private capital or accepting taxpayer funds. While Citigroup and Bank of America will surely receive another state support Federal Reserve chairman Ben Bernanke denies any plans to nationalize the financial institutions.

“US government ownership is not an objective,” the US Treasury added. In cases of significant federal investment, “our goal will be to keep the period of government ownership as temporary as possible”, he said.

So far no specified limit was announced by the government in regards of the amount of money involved. The institutions to conduct the stress tests include the Federal Reserve, the Federal Deposit Insurance Corp, the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Those banks whose assets are below $100bn will also be able to apply for the scheme.