US banks pass first round of Federal Reserve stress tests

All 31 US banks have made it through the first round of the Federal Reserve's stress tests, the central bank has revealed.

The Federal Reserve runs an annual stress test, which began in 2009, to ensure that America's banks are properly equipped to deal with another global economic crisis.

The central bank confirmed that all the banks had enough in reserve to be able to continue lending in the event of another recession. This is the first time that all the US banks have surpassed the 5% minimum for top-tier capital since the tests began.

However, Wall Street banks such as Goldman Sachs, Morgan Stanley and JP Morgan Chase & Co were among the five banks with the lowest readings.

The central bank determines the ratio by comparing capital with the loans it has handed out.

The Federal Reserve's next bout of testing will take a closer look at how the banks manage risk, and how they can maintain capital levels and still return money to shareholders.