Capital One Financial and JPMorgan Chase had to reduce their planned shareholder payouts in order to get the Federal Reserve to approve the distributions, the central bank said Thursday.
The Fed said Capital One
and JPMorgan Chase
would have had minimum capital ratios lower than required under the plans they submitted to the Fed and after the stress test. Both were able to get Fed approval by reducing those shareholder distributions by an unspecified amount.
In addition, the Fed said Credit Suisse
will have to address weaknesses in its capital adequacy process by the end of October. The Fed said it considered those weaknesses to be “limited.”
The Fed’s Comprehensive Capital Analysis and Review otherwise signed off on the buyback and dividend plans of 18 banking giants including Bank of America
, Goldman Sachs
, Morgan Stanley
and Wells Fargo
“The stress tests have confirmed that the largest banks are both well capitalized and place a high priority on strong capital planning practices,” said Randal Quarles, the Fed’s vice chair for supervision, in a statement. The Fed says capital has increased from about $300 billion in 2009, when the stress tests started, to about $800 billion.
Totalled up, the Fed said it expects major banks to return more than 100% of earnings to shareholders this cycle through buybacks and dividends.
JPMorgan said it will increase its dividend to 90 cents a share, from 80 cents, and will increase its share buybacks by $9 billion, to $29.4 billion. Capital One will keep its dividend at 40 cents a share and increase its buybacks to $2.2 billion, from $1.2 billion.