D.he US Federal Reserve (Fed) has classified the largest banks in the country as crisis-proof after a corona stress test and relaxed certain requirements to protect capital resources. Share buybacks are allowed again in the first quarter, the Fed announced on Friday after the market closed. However, this only applies under strict conditions, such as that the distributions are offset by corresponding profits.
However, strict conditions still apply to dividends. Increases above the level of the second quarter of this year remain taboo for big banks.
Fed vice president Randal Quarles, who is responsible for banking supervision, gave the 33 largest financial institutions good marks. The banking system had been “a source of strength” this year and the stress tests of the central bank had confirmed that the financial institutions would still be able to maintain lending to households and companies even in a bad crisis scenario.
$ 100 billion in reserves
In June, the Fed imposed far-reaching restrictions on the financial corporations so that they could keep their cash reserves together in the Corona crisis. Thanks to these regulations, the banks have managed to set aside around $ 100 billion in capital buffers, the Fed said.
America’s largest bank JPMorgan Chase announced multi-billion dollar share buybacks immediately after the results of the bank stress test were announced. The financial group is launching a $ 30 billion share buyback program that is scheduled to begin in the first quarter. The investment bank Goldman Sachs did not take long and announced shortly after the announcement by the Fed that it would continue its share buybacks in the first quarter.