With the next round of annual stress test results out Wednesday after the close, The Deal’s senior editor Ron Orol explains the importance of the tests and breaks down which banks will be the most important to watch. While Orol expects that Citigroup will improve itself from last year, when it failed the second round of tests, he believes that it will be regional banks who fare the best. Regional banks like Fifth Third Bancorp and Huntington Bancorp are well-positioned as they’re more capitalized than some of their larger rivals and haven’t had problems with risk management or other qualitative factors. However, Orol believes that Goldman Sachs and Morgan Stanley will be especially important to watch as they may find themselves at the bottom of the barrel.
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