State Street Corporation, announced that the Board of Governors of the Federal Reserve System has determined that, under the stress test administered under The Supervisory Capital Assessment Program (SCAP), State Street does not need additional capital. The Federal Reserve concluded that State Street has a sufficient capital buffer to withstand even the stress test’s “more adverse”2 scenario.
“We’re very pleased to have passed this important supervisory test by a wide margin,” says Ronald E. Logue, chairman and CEO of State Street. “Even under the test’s ‘more adverse’ stress assumptions, State Street’s capital levels are well in excess of the required ratios established by the supervisory authorities. The Federal Reserve’s findings are also consistent with our own long-held views of the quality of our assets. With the stress test completed, we are now in a position to consider repayment of the TARP preferred stock and warrants under the appropriate circumstances.”
1Represents risk-weighted assets as defined in 12 CFR 225 Appendix A.
2The stress test’s “more adverse” scenario, which included a decline in GDP of -3.3% in 2009 and an increase of 0.5% in 2010; civilian unemployment of 8.9% in 2009 and 10.3% in 2010; and house price declines of -22% during 2009 and -7% in 2010, are described in detail in The Supervisory Capital Assessment Program; Design and Implementation released by the Board of Governors of the Federal Reserve System on April 24, 2009.
State Street’s application of the stress test’s “more adverse” scenario and methodology on a pro-forma basis (which assumes consolidation of the asset-backed commercial paper conduits during 2009) results in the following projected tier 1 Capital and tier 1 Common ratios as of December 31, 2010. The Federal Reserve in its announcement only published these ratios as of December 31, 2008.
D.C.