The banks are KeyBank, Fifth Third and PNC, which swallowed National City last year. The government stress tests put the banks’ balance sheets through a hypothetical financial crisis—one worse than what the country is currently facing, and determined what they would need to survive. PNC needs to raise $600 million, Fifth Third needs $1.1 billion, and KeyBank has to find $1.8 billion.
Bill Mahnic, a finance professor at Case Western Reserve University, says the amount the regional banks need to raise should be seen in the context of their overall size.
MAHNIC: Being the fourth largest bank in the United States, PNC needing only $600 million, that’s a very small increase in their capital base.
Analysts were mostly relieved by the results, which were seen as better than expected. Mahnic says the banks will likely now try to sell business units, and try to find investors to raise the capital.