Investment bank Morgan Stanley (NYSE:MS) has doubled its quarterly dividend and announced $12 billion U.S. in stock buybacks after it and other big American banks passed the latest stress test administered by the U.S. Federal Reserve.
The biggest U.S. banks are announcing plans for distributing capital after getting the green light from the central bank to resume dividend payments and share buybacks. All lenders passed the U.S. Federal Reserve’s stress test last week, freeing them from pandemic-era restrictions that prevented them from spending excess capital.
Goldman Sachs said it is boosting its quarterly payout by 60% to $2 U.S. a share, effective October 1. And JPMorgan Chase & Co. said it was raising its dividend to $1 U.S. from 90 cents U.S.
Bank of America Corp. (NYSE:BAC) said it would increase its dividend 17% to 21 cents U.S. a share, subject to board approval, according to a written statement.
Citigroup (NYSE:C) was an outlier among the nation’s biggest banks, holding its dividend steady at 51 cents a share -- where it’s been for almost two years.
Wells Fargo & Co. (NYSE:WFC) plans stock buybacks of as much as $18 billion U.S. and said it will double its dividend to 20 cents U.S. a share.
Payouts are expected to surge this year, which is welcome news for investors but could put big banks on defense again in Washington. Critics have condemned buybacks and dividends for enriching executives and called for lenders to use excess capital to do more for employees.
Banks don’t need the U.S. Federal Reserve to sign off on their capital plans, as long as each lender stays above its established capital minimum. If a bank falls below its required stress capital, the central bank can hit it with sanctions, including restrictions on capital distributions and bonus payments.
