America’s small and medium-sized banks are short $24 billion from meeting the government’s capital standards set out by the stress tests.
If the government's stress tests were applied to the next 200 banks in terms of size, after the biggest 19, they would unearth capital shortfalls for 38 percent of them, the FT said.
That would lead to a deficit of about $16.2 billion in common equity, according to investment bank Sandler O'Neill, which carried out the research for the FT.
If the remaining 7,700 banks in the US underwent the same financial testing, it would result in a further $7.8 billion capital deficit, the report said
The findings come after the government’s high-profile tests for large banks and puts pressure on their smaller rivals. The original tests found that 10 out of the 19 large US institutions did not have adequate cash to survive their worse-case-scenario modeling.
The banks have yet to repay $27 billion in aid from the troubled asset relief program, the FT said, adding that those funds could be made up from internal resources instead of raising more funds, the report said.
The FT pointed out that while regulators are unlikely to allow any of the 19 largest banks to fail, the smaller banks with capital shortfalls by not be considered too big to fail.