units of rbs, santander and hsbc as part of its stress tests. tauchy has the report. >> the federal reserve just saying that 25 banks had their capital plans approved. shareholders & could see better returns in the coming fiscal year. the fed rejected five banks for several different reasons. three of those five banks are u.s. subsidiaries of foreign institutions. the fed saying this is the first time those banks are going through the exercise, that they simply have not shown that they happen ready to prove that they had capital here in the u.s. to with stand a crisis. one of those banks, zion's, had not cleared the fed's most recent hurdle so they cannot return capital to shareholders and will need to resubmit and possibly raise equity toes meet the fed's hurdles. the group citigroup is a shock to the shareholder base and to the market in after hours trade. the stock seeing a lot of pressure, going deep into the red after the fed rejected it on a qualitative basis. the fed saying this time citigroup models were not up to snuff. it wouldn't have

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did, santander. the fed rejected capital plan for psy on's bancorp is only one that failed the fed's stress teslas week. zion's. goldman saks, jpmorgan chase, wells fargo and bank of america. goldman and b-of-a just resubmitted plans in the last week to meet one key financial ratio demanded by the fed. they will be returning less to shareholders than they originally proposed fed officials said. to be clear the fed did not reject the plan for citi and three foreign firms for lack of capital but rather for qualitative subjective reasons, such as risk management and risk measurement practice. the fed said citi was weak to project revenue and losses in its global phrase only zions did not get approval among those five because of weak capital. the officials that got rejected, have 90 days, must within 90 days resubmit their capital plans to the fed. zions already announced it is going to do that the fed reviews the plans to make sure after dividend and stock repurchases the bank will have enough capital t

santander. >> it is really interesting. on the quantitative measures to peer one capital, they pass. >> they passed in that sense but they failed on the processes. r.b.f.?does it mean for it is -- r.b.s.? it is planning to sell shares. >> revenue and losses under economic stress. how many problems did this bank have? this is one of them. we were meant to get rid of this bank this year. i think you have two questions this morning. does this raise the red flag for potential buyers and diminish value of any potential sale. citigroup got hit hard. for the s matter european headquarters. it could dictate the amount of money they are allowed to pass back. >> this is what the fed said about santander. they rejected their u.s. unit because of widespread inefficiencies in governance, internal controls, risk management. that is quite damming. >> thanks, jon. see you later. with any stress test, the estion could be were the uestions too easy? we'll have an interview with andall kroszner. >> hans nichols is in brussels. >> today would

units of rbs, hsbc and santander fell short. >> jon, what does it mean for banks in europe?> probably hard to quantify but what is clear right now is that from her reputational standpoint people will be asking questions.f o for rbs, it is one more in a long list of issues. the fed objected to the u.s. unit's capital plan because of concerns about its practices for estimating revenue and losses under economic stress. this is the very same unit that rbs want to sell. they want to get this unit off the books, whether that it is through an ipo or an outright takeover. two pushes we asked -- does this raise a red flag for buyers? does this it away a value? rbs trading about two percent down. >> the very latest on some of these banks. stay with us for more on his views. a strategist and head of investment across bridge capital. like to citigroup and you actually own some of the stock. big disappointment after the announcement yesterday was.git we own citigroup and j.p. morgan. what we heard is that the fed is not happy. it is disappointing news, but at sector,as a bank in the i am

>>> rbs, santander and

hsbc, santander and rbs citizens. >> so the bigger question this raises is what's happening behind the scenes with citi and its regulators. are there other problems we don't know about? >> i think the timing of the mexico incident was somewhat embarrassing for citi. i don't know specifically, you know, what issues they didn't address. there was some hint that they didn't do something right. it is harder, perhaps, for regulators to get their hands around global risk and citi certainly has the biggest global platform of any u.s. banks. but, you know, this is a missed opportunity rather than a failure in our eyes. citi was up 7% last week. they're probably going to give back most of that gain this week. but the return of capital story for citi is still very much alive and well and one way to look at this is we still have even more dry powder going forward. >> anthony, andrew has a question, too. >> anthony, i have a question. it's not a citigroup question. it's the story we just did right before that, which is about ken lewis, bank of america, and whether or not you think you should have

for citigroup, hsbc, citizens and santander, the fed had quality issues for the way they were planningr each bank. fed officials acknowledging significant issues at the u.s. subsidiaries of those foreign banks but acknowledging it was the first time going through the process. citibank will be the surprise to the market. the shares are down nearly 3% falling off a cliff after hours. the fed said citi is a different animal. it had issues raised previously by regulators it didn't fix and important to note, citi can still issue dividends and buy back stock, it just can't increase those amounts just yet. all five banks with those objections we should note have 90 days to resubmit the plans. for the other 25 banks we don't know whether they will increase their distribution or by how much. we just know the fed would allow them to do that if they wanted to. they will disclose that throughout the afternoon. an interesting tea leaf to read, investors could be disappointed by what they see from bank of america and goldman sachs. those two banks had to resubmit their plans to the federal reserve a

and what we see with citi, what we see with hsbc and santander similarly that the fed is looking at ite banks to improve risk management. risk management has to come from the back office and has to become sea level focus and that's i think what we're seeing with citi. >> who do you blame here? do you blame the current ceo corbat or the prior ceo pandit? >> there's no one ceo to blame. this is an industry challenge. the industry has underinvested in technology and process and governance and, you know, whether you look at citi as a sacrificial lamb or one of the largest banks in this country that had to improve dramatically over last year, what we see actually one note i want to make is that the requirements keep rising. it's a horizontal review. the regulators are looking at best practices and taking them across the industry. >> do you think controls in general are capable of maintaining global exposure in this era or is that really a thing of the past? >> i think historic -- i actually think that this is not just about technology and not just about analytics. it's about staffing up. i