U.S. Fed slashes dividend plans of large Wall Street banks
WASHINGTON, March 11 (Reuters) - Goldman Sachs , JPMorgan Chase and Morgan Stanley were forced to cut planned shareholder returns in order to pass the U.S. Federal Reserve's annual "stress tests" of the industry's health, which the Fed published on Wednesday.
The regulator also criticized Bank of America for poor risk controls.
The U.S. units of two foreign banks, Deutsche Bank and Santander, saw their capital plans rejected wholesale on so-called "qualitative grounds," which indicates that the Fed doubts the lenders' grip on internal data and ability to run robust risk control systems.
Bank of America's plans were approved, but the regulator directed the bank to resubmit its plans by September "to address certain weaknesses in its capital planning processes," the Fed said in a statement.
In the annual tests, regulators look at how banks would perform under financial crisis-like conditions. Banks must show that, even with planned capital distributions, they could stay above certain minimum equity levels.
No banks failed by falling below the minimum capital levels. But Goldman Sachs, JPMorgan would all have fallen below at least one benchmarks for top-tier capital if they had executed their original plans for shareholder returns. All three passed after slashing those distributions.
Four of Big 6 Needed to Refile Capital Plans -- Market Talk
It's 3 years in a row now that Goldman Sachs had to refile its capital-return plan with the Fed before getting final approval. And while this is the 2nd-straight needed at Bank of America, this go-around it got conditional approval of its initial plan. It will have to refile by Sept. 30. Also needing adjustment from their initial plan to get approval were Morgan Stanley and JPMorgan. --a new plan was required from JPM in 2013 as well. But this year, the refile is already done and approved. Getting a go-ahead with their first submissions of 2015 were Citigroup and Wells Fargo. Now the wait on what exactly the banks sought on the buyback and dividend fronts; they will announce their plans individually. |
