Invictus Consulting Group is now offering bank managers and investors the ability to obtain preliminary stress test results on banks using publicly available data and the firm’s experience in stress testing.
Under the 2010 Dodd-Frank Act, banks with between $10 billion and $50 billion in assets, deemed “too big to fail,” are required to undergo self-conducted stress tests beginning in 2013. Forty banks in the U.S., excluding institutions that fall within the range and are owned by foreign entities, will be subject to the new requirement.
“Invictus’ stress testing of ‘Dodd-Frank Banks’ will redefine how investors evaluate these stocks by establishing a new standard of analysis,” Kamal Mustafa, the chairman and CEO of Invictus, said, iStockAnalyst reports. “It will show how much capital is available for loan growth, dividends, stock buy backs, and acquisitions—critical metrics for determining bank stock prices.”
Of the 40 banks required to undergo self-conducted stress testing, 38 of those were subjected to the Invictus stress test, which uses scenarios similar to those used by the Federal Reserve. Thirty-two of the banks were labeled capital unconstrained to meet regulatory requirements and six were likely to undergo scrutiny by financial regulators without capital raising or other initiatives, iStockAnalyst reports.