European Banks' U.S. Divisions Fare Well in Fed's 2020 Stress Tests

The Federal Reserve released its 2020 stress tests results, which includes U.S. divisions of European banks Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, Santander, and UBS. Despite the more severe assumptions in this year’s test, the European banks’ U.S. divisions fared well overall, with the lowest Common Equity Tier 1 ratio for banks we cover at 10.8% for BNP Paribas in the severely adverse scenario. This looks adequate to us and supports our belief that U.S. exposure, although it varies for the European banks, will not be a stumbling block in this crisis.