FINANCIAL TIMES: Big US banks are set to return money to shareholders after the Federal Reserve released the results of “stress tests” on 19 financial groups showing that all but four – including Citigroup – had passed the exercise.
Results of the test, which were rushed out two days early after the Fed said it was concerned about information leaking, sparked a rally in US bank stocks. The S&P financials index rose 3.9 per cent and is now more than 18 per cent higher for the year, with JPMorgan Chase, Wells Fargo and Bank of America leading the way. Citigroup rose 6.3 per cent before the market close, but fell close to 4 per cent after hours as it became clear the bank had failed…
With many banks around the world concentrating on raising capital levels, the Fed’s decision to allow a broader distribution from US groups is controversial. Some academics argue that dividends should not be increased until banks have reached the new tougher capital levels prescribed by the Basel III agreement of international regulators… (more)
