Dallas, Texas 11/12/2013 (Financialstrend) – In the trading week which ended on November 8, the S&P 500 tracked, $11.65 billion market capped KeyCorp (NYSE:KEY) has scripted a 3.6% increase in its market valuation during trading last week on the likelihood of increase in the interest rates regime. Adding fuel to the fire is the news of stress tests to be initiated by the central bank to test how the banking sector will react in the case of increase in interest rate.
The Fed wants to track the possible results of any big jump in the “long-term interest rates” over the banking players. It is also designed stress tests which are expected to simulate a big housing sector crash. Since the financial turmoil in the financial sectors shook the faith in free market economy, the Fed has been overseeing annual stress tests which are designed to monitor the capability and well being of banks to withstand shocks in the financial sector.
The banking regulator wants to test out the largest banks in U.S on how they would cope in a hypothetical situation which involves a steep increase in the interest rates. Investors should note that this years stress test would involve a total of 30 banks, up from the 18 banks including KeyCorp which had been put through their paces in 2012 stress tests. These tests have been keeping in mind hypothetical financial turmoil situations instead of forecasted numbers in order to scare the banks into putting aside requisite reserve funds to tide over any future turmoil when the interest rates do go up. Fed also announced that the 18 banks including KeyCorp (NYSE:KEY) which got tested previously had managed to double the common capital pool to $836 billion in 2Q13 from the $392 million they had set aside in the beginning of 2009.
The shares of KeyCorp were trading at $12.96 per share as of close of business on November 11.