The Federal Reserve Bank of America (Fed) announced the results of the latest round of stress tests on Friday (18th). All banks meet the capital requirements of the two recession scenarios. The Fed also announced that it will allow major Wall Street banks to repurchase shares in the first quarter of 2021. The conditions are The total size of dividends and treasury stocks must not exceed the average net profit of the most recent four seasons, and bank stocks have soared after hearing the news.
Fed Vice Chairman Randal Quarles, who is in charge of financial supervision, said: “Over the past year, the banking system has always been a source of strength. Today’s stress test results show that even if the economy suddenly deteriorates in the future, big banks will still be able to continue to lend. To families and businesses.”
In order to ensure that the banking industry has sufficient funds to borrow during the epidemic, the Fed has restricted the distribution of dividends and repurchases of stocks by large banks since June.JPM-US) Jumped more than 5% and reversed the downward trend of closing, Goldman Sachs (GS-US) Rose 4.4%, Wells Fargo (WFC-US) Rose 3.5%.
JP Morgan Chase (Xiao Mo) announced after the Fed stress test results that the board of directors has passed 30 billionUSDThe treasury stock plan will be implemented in 2021.
Treasury stocks are extremely important to the banking industry and usually account for 70% of all funds that the banking industry returns to shareholders.
The Fed’s latest move is intended to restrict banks from implementing treasury stocks and dividend plans that make more profits. Officials said that before the 33 banks announced their fourth-quarter profits, it is still impossible to know which banks can execute treasury shares.
The Fed stress test sets a common scenario and two recession scenarios. Officials said that the stress test is quite strict, but the banks have performed very well.
Bank stocks are the most affected group among the S&P 500 index stocks this year, and their stock prices fluctuate with the epidemic and economic recovery.
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