WASHINGTON (AP) - The Federal Reserve has given the green light to all 34 of the biggest banks in the U.S. to raise their dividends and buy back shares, judging their financial foundations sturdy enough to withstand a major economic downturn.
It was the first time in seven years of annual "stress tests" that every bank assessed by the Fed won approval for its capital plans. All have at least $50 billion in assets.
The Fed on Wednesday announced the results of the second round of its annual stress tests. Those allowed to raise dividends or repurchase shares include the four biggest U.S. banks - JPMorgan Chase, Bank of America, Citigroup and Wells Fargo.
Capital One's plan only got conditional approval and it has six months to revise it. But the bank was still allowed to return profits to shareholders.
After the results were made public, the banks quickly jumped in with announcements of dividend boosts and share buyback plans. They included a doubling of Citigroup's dividend, a 60 percent dividend increase by Bank of America and a 12 percent hike for JPMorgan.
Capital One, because of its conditional status, opted to keep its dividend at its current level but is planning a share repurchase.
The second part of the seventh yearly check-up tested the banks to determine if their current plans for paying out capital to shareholders would still allow them to keep lending if hit by another financial crisis and severe recession.
With the 34 banks holding more than three-quarters of total assets of all U.S. financial companies, the results showed strength in an industry that nearly toppled the financial system - and has recovered handily nearly nine years on from the 2008-09 crisis.