Barclays share price: US unit passes Fed stress test

Fed’s Board of Governors does not object to bank’s capital plan

Barclays share price: US unit passes Fed stress test

Barclays’ (LON:BARC) US unit has passed the Federal Reserve’s latest stress test, the blue-chip lender has said. The US central bank’s stress tests were introduced in the wake of the financial crisis to examine the capital planning practices of the nation's largest banks, including foreign subsidiaries operating in the country.

At home, Barclays’ share price has been subdued in today’s session, having given up 7.74 percent to 189.60p as of 13:13 BST. The stock is underperforming the broader London market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.54 percent higher at 7,656.84 points. The group’s shares have lost nearly eight percent of their value over the past year, as compared with about a 4.3-percent gain in the Footsie.

Barclays passes Fed stress test

Barclays said in a statement yesterday that the Board of Governors of the Federal Reserve (FRB) had not objected to the capital plan of its Barclays US LLC division. The Fed announced the results from its latest stress test yesterday, objecting only to Deutsche Bank’s capital plan.

The FTSE 100 lender explained that under both the FRB’s and its own company-run assessment of the supervisory severely adverse scenario, the projected capital ratios of Barclays’ US intermediate holding company had remained above regulatory minimum required levels across all nine quarters of the test.

“This result serves as another demonstration of Barclays’ track record of successfully responding to the evolving regulatory environment that all banks face,” the group’s chief executive Jes Staley commented in the statement, adding that the company looked forward “to ongoing dialogue with the Federal Reserve and our other regulators as we continually enhance our capital planning processes”.

Analysts on blue-chip lender

Credit Suisse reiterated its ‘outperform’ rating on Barclays this week, valuing the shares at 235p, while HSBC, which sees the group as a ‘buy,’ boosted its price target on the stock from 240p to 260p earlier in the week. According to MarketBeat, the blue-chip lender currently has a consensus ‘buy’ rating and an average valuation of 228.06p.

As of 14:10 BST, Friday, 29 June, Barclays share price is 189.02p.

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