NEW YORK/WASHINGTON (Reuters) – U.S. bank analysts have cleared their diaries on Thursday forward of an extended night poring over outcomes of the Federal Reserve’s bank well being checks, which have been upended this yr by the coronavirus pandemic. FILE PHOTO: Federal Reserve Board constructing on Structure Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File PhotoSince 2009, towards the top of the monetary disaster, the U.S. central bank has examined a snapshot of massive bank stability sheets in opposition to an excessive hypothetical financial shock to evaluate their threat of losses, capital power and capital necessities. This yr, analysts, buyers and bankers are flying blind after the financial disaster triggered by the outbreak of novel coronavirus coincided with a brand new regulatory tweak to tear up the Fed’s “stress test” playbook. “Inevitably, there will be some surprises in the results,” mentioned Gerard Cassidy, an analyst at RBC Capital Markets, including that the assessments have been “a major event” as a result of adjustments. The uncertainty has been mirrored in uncommon volatility in choices on bank securities within the final three months, in response to Goldman Sachs analysis printed on June 15. The Fed will launch outcomes of the take a look at, which was devised earlier than the pandemic, on Thursday after markets shut. The Fed is predicted to offer steerage on how banks would fare if the present financial hunch worsens. However it would maintain again info on every bank’s capital necessities, and lenders will be unable to announce their plans for capital distributions, equivalent to dividends, till Monday night. This yr, the Fed won’t outrightly “pass” or “fail” banks, making the outcomes much more ambiguous for analysts and buyers making an attempt to calculate the place every bank stands. One merchandise analysts say they are going to concentrate on is the affect of a brand new “stress capital buffer” the Fed launched to raised align lenders’ capital necessities with their threat profiles. The large unknown is how a lot that new buffer raises every banks’ general capital requirement: the nearer that requirement will get to the bank’s precise capital stage, the larger the prospect it should lower distributions. Dividend limits are calculated as a share of the previous 4 quarters of revenue, which has been declining resulting from pandemic-related loan losses. The Fed won’t launch ultimate buffer knowledge for a number of weeks, however analysts imagine they will determine it out Thursday night time utilizing a method within the new buffer rule, and different knowledge the Fed will present on how badly the assessments dented banks’ general cushion. For now, analysts anticipate most banks to be okay due to the sturdy buffers that have been constructed up over the previous decade, but it surely stays unclear how badly losses on loans to struggling shoppers and corporations may alter that calculation in coming months. “Bank specific results will not be disclosed, so estimating capital plans will be challenged,” Brian Kleinhanzl, an analyst with Keefe, Bruyette & Woods, wrote on Friday. “Dividend cuts can still not be ruled out.” Reporting by David Henry in New York and Pete Schroeder in Washington; Enhancing by Paul SimaoOur Requirements:The Thomson Reuters Belief Ideas.