Foreign banks and Fed at odds on stress test impacts
HSBC North America predicted a loan-loss rate of 2.7%, well below the Fed’s 6% estimate
The US units of HSBC and TD Bank drastically undershot the Federal Reserve’s estimates of how much of their loan books would go up in smoke in a financial crisis, stress test disclosures show.
Under the severely adverse scenario of this year’s Dodd-Frank Act stress test (DFAST), the six large non-US bank participants forecast a loan-loss rate of 3.8% on average through the nine quarters of the simulation, against the Fed’s projected 4.8%.
HSBC North America predicted losses of 2.7%, against
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