On December. 2020 at 5:00 p.m.
U.S. banks can repurchase shares in the first quarter of 2021, more than six months after they are frozen. So the U.S. Federal Reserve decided on Friday after conducting new stress tests for thirty-three of the industry’s biggest players. “ Large banks may continue to lend to homes and businesses despite a sharp decline in economic conditions », Notes Randall Quares, Vice President of the Central Bank, is responsible for overseeing the tests. ” The Council will continue to assess their regression and monitor economic conditions “, The company adds in a press release.
So all the restrictions taken last June were rather not removed. Bank dividend payments are extended until the end of March 2021. “ In the first quarter of 2021, dividends and share repurchases will be limited to one sum based on last year’s earnings. »Stands for Central Bank. ” If a company does not earn income, it cannot pay dividends or repurchase shares , She adds. In particular, banks can distribute cash to shareholders as long as those amounts do not exceed the average profit of a bank over the past four quarters.
The green light comes after the European Central Bank opened the door to dividends last week under certain conditions.
Satisfied with these new U.S. rules, JPMorgan is already looking to repurchase $ 30 billion in its shares in the first three months of 2021. It is important to remember that stock purchases are one of the most important tools for distributing capital. Banks, facilitation is welcome. Big banks, including JPMorgan, Wells Fargo and Bank of America, initially agreed to give up in the second quarter to deal with the crisis. In June, the central bank went on to ask all banks to limit the payment of dividends to their shareholders – the average limit on profits made over the past four quarters -. It also banned them from repurchasing their own shares in the third quarter for fear of major losses that could lead to a health crisis.