Fair-value losses derail payout plans at State Street, BNY

Hit to capital adequacy from available-for-sale book forces rethinks on rate sensitivity

Mark-to-market losses on fair-value securities burned through State Street’s and BNY Mellon’s capital Common Equity Tier 1 (CET1) ratios in the first quarter, forcing both banks to curtail shareholder payouts while they reduce their sensitivity to rising yields.

At State Street, losses recorded in accumulated other comprehensive income (AOCI) – a line that captures value swings in the available for sale (AFS) securities portfolio – widened 138% to $2.7 billion in Q1, tearing a 110-basis point

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