• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Republica Press

Your Business & Political News Source

REPUBLICA PRESS
Your Business & Political News Source

  • Home
  • BUSINESS
  • MONEY
  • REAL ESTATE
  • POLITICS
  • US
  • WORLD

The Fed says buyback and dividend restrictions will end for most banks.

March 25, 2021 by Staff Reporter

The Federal Reserve said Thursday that the pandemic-era limitations it had placed on banks that restricted share buybacks and dividend payouts will end midway through 2021 for most firms, a victory for some of America’s biggest financial institutions.

“Temporary and additional restrictions on bank holding company dividends and share repurchases currently in place will end for most firms after June 30, after completion of the current round of stress tests,” the Fed said in a release, a reference to its annual review that gauges a bank’s ability to withstand severe economic conditions.

Whether banks are able to restart normal payouts, which help to boost their share prices and reward investors, will hinge on whether they have capital above their required minimum levels. Since December, the amount that the banks can pay out to shareholders has been limited based on the company’s income over the past year. Before December, they had been barred from buying back shares or increasing dividends.

The Fed’s goal was to conserve capital — sources of funding that are easy to turn into cash in a pinch — so that banks would stay healthy and remain able to lend even as the United States economy took a major hit from the coronavirus pandemic and the lockdowns meant to contain it. Banks have remained healthy through the episode, helped in part by Fed policy responses that kept markets from melting down more disastrously last March.

“The banking system continues to be a source of strength, and returning to our normal framework after this year’s stress test will preserve that strength,” Randal K. Quarles, the Fed’s vice chair for supervision, said in a statement.

Still, restrictions could remain for some. Any “bank that falls below any of its minimum risk-based requirements in the stress test will remain subject to the additional restrictions for three extra months, through Sept. 30,” according to the Fed’s release.

And if they are still below after that, the central bank’s normal minimum capital requirement framework “will impose even stricter distribution limitations.”

View Source

Filed Under: BUSINESS Tagged With: Banking and Financial Institutions, Coronavirus, Dividends (Finance), Economy, Federal Reserve System, Income, Policy, United States, United States Economy

Primary Sidebar

More to See

DARPA awards nuclear spacecraft contracts to Lockheed Martin, Bezos’ Blue Origin and General Atomics

An artist's rendering of a DRACO spacecraft.DARPAThe Pentagon's research and development arm on Monday awarded a trio of companies with contracts to … [Read More...] about DARPA awards nuclear spacecraft contracts to Lockheed Martin, Bezos’ Blue Origin and General Atomics

Former NBA All-Star Shawn Kemp Sells Luxe Seattle Home for $2.18M

The six-time NBA All-Star Shawn Kemp has sold his sumptuous digs in Seattle for $2.18 million.The custom home in the Pacific Northwest came on the … [Read More...] about Former NBA All-Star Shawn Kemp Sells Luxe Seattle Home for $2.18M

Why Derek Chauvin, Charged With Killing George Floyd, Sold His Minnesota Home

The police officer charged with the murder of George Floyd and the prosecutor who initially charged the officer both sold their Minnesota homes last … [Read More...] about Why Derek Chauvin, Charged With Killing George Floyd, Sold His Minnesota Home

Copyright © 2021 · Republica Press · Log in