The U.S. Federal Reserve Board announced Monday that nine of the 10 large banks in the United States that were required to raise additional capital after it stress tested them earlier this year, have now done so.

The Fed said that all the banks, with the exception of GMAC, that needed to raise capital, or improve the quality of their capital, to withstand a worse-than-expected economic scenario now meet or exceed their required capital buffers.

GMAC is expected to meet its remaining buffer need by accessing the TARP Automotive Industry Financing Program, and is in discussions with the U.S. Treasury on the structure of its investment, it said.

The stress tests found that the banks needed to augment their capital by US$74.6 billion, mostly in the form of common or contingent common capital, by November 9. The Fed said that they have now issued common equity or other eligible securities of US$39 billion; converted existing preferred equity to common equity in the amount of US$23 billion; and, sold businesses or portfolios of assets that increased common equity by US$9 billion.

Some firms also increased capital through other actions, including reduced dividend payments, issuance of common shares to employee stock ownership plans, and larger-than-anticipated pre-provision net revenue, to meet their required buffers. As a result of all these actions, Tier 1 Common equity increased by more than US$77 billion at the 10 firms.

IE