Fed Stress Test 2026 Leaves Capital Rules Unchanged
Fed Stress Test 2026 found banks stayed above minimum CET1; the Fed said results won't change capital requirements until 2027, easing buyback constraints.
KEY TAKEAWAYS
- All 32 banks remained above minimum CET1 under the Fed's severely adverse supervisory scenario.
- The Fed reiterated the 2026 stress-test results will not change capital requirements before 2027.
- The report projects nearly $708 billion in losses and an aggregate CET1 trough of 11.2%.
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The Fed Stress Test 2026, published June 24, found 32 large U.S. banks remained above minimum capital requirements under a severely adverse scenario and said the results will not change capital requirements before 2027.
Stress Test Scenario and Aggregate Losses
The Federal Reserve Board’s annual stress test confirmed that large banks are well positioned to withstand a severe recession and continue lending. All 32 banks subject to the exercise remained above minimum common equity tier 1 (CET1) capital requirements. The Fed’s supervisory scenario assumes a severe global recession with a 39.0% drop in commercial real estate prices, a 30.0% decline in house prices, and unemployment rising to 10.0%.
The detailed report projects the group would absorb nearly $708 billion in losses over nine quarters. The aggregate CET1 ratio is expected to fall from 12.8% in the fourth quarter of 2025 to a minimum of 11.2%, before rising to 12.7% at the end of the projection period, an overall decline of 1.6 percentage points. Losses are concentrated in consumer and commercial credit, including roughly $200 billion in credit-card losses, $160 billion in commercial and industrial loan losses, and $75 billion in commercial real estate loan losses.
Federal Reserve Vice Chair for Supervision Michelle W. Bowman said, "Today's results underscore the strength of the banking system."
Regulatory Treatment and Barclays Results
In February 2026, the Federal Reserve Board voted to maintain current Stress Capital Buffer (SCB) requirements until 2027 while updating loss-estimating models and incorporating public feedback. The June 24 press release reiterated that the 2026 stress test results will not affect large-bank capital requirements before 2027. The Fed also stated there is no expectation that firms will delay public disclosure of planned capital actions such as dividends or share buybacks through the third quarter of 2027.
Barclays PLC announced on June 25 that Barclays US LLC’s projected capital ratios remained above regulatory minimums across all nine quarters of the supervisory scenario. Barclays US LLC, the U.S. intermediate holding company of Barclays PLC, is subject to the Fed’s capital rules and the Comprehensive Capital Analysis and Review framework. The company published its own assessment of the results under the Fed’s severely adverse scenario on its website, aligning with the Board’s aggregate findings and demonstrating resilience at its U.S. operations.
