The US units of European lenders Santander and Deutsche Bank have failed to clear Federal Reserve’s annual stress test, which assesses whether lenders can withstand a financial crisis.

The test judges if the banks operating in the US have the ability to lend to households and businesses even in times of stress and failing which prevents the US units of the banks from distributing capital to their parent companies.

Following the results, the Federal Reserve has vetoed the capital distribution plans proposed by the US units Deutsche Bank and Santander and barred them from issuing dividends or stock buybacks until it approves a new plan.

Fed has also notified Bank of America to revise its financial plans by 30 September, 2015 due to certain weaknesses.

The remaining 28 banks including Wells Fargo, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, who were evaluated in the annual stress test have been approved of their capital plans.

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