Stress tests show $75bn buffer needed

US regulators on Thursday ordered 10 of the nation's largest banks to add a total of $74.6bn in equity following the completion of stress tests, triggering a frenzy of activity as banks lined up to announce capital-raising plans.

“These tests will help ensure that banks have a sufficient capital cushion to continue lending in a more adverse economic scenario,” Tim Geithner, US Treasury secretary, said.

The US authorities said that the tests projected that losses at the top 19 banks over 2009 and 2010 would reach $599bn if the adverse scenario set out in the stress test materialised.

They said that bank operating earnings would absorb $363bn of these losses under the stress scenario. They estimated that 10 of the 19 top banks would need a further $74.6bn in equity to be sufficiently well capitalised at the end of 2010 to cope with potential losses beyond that period.