Deutsche Bank AG on Thursday passed an annual health check by the Federal Reserv...
JPMorgan, following the test results, announced plans to increase its quarterly dividend to 90 cents per share from 80 cents, starting in the third quarter, and buy back up to $29.4 billion of shares over the next year.
Banks normally resubmit when they are pushing to return the maximum amount of capital possible to shareholders and overestimate what the Fed will allow them to do in their initial proposal, banking and regulatory sources say.The Fed’s stamp of approval gives Deutsche a major boost as it works on a restructuring plan. The bank flunked the test in 2015, 2016 and 2018.
The Federal Reserve, meanwhile, ordered Credit Suisse to address weaknesses in its capital adequacy process by October, and restricted its capital distributions to last year’s levels until the weaknesses are addressed. The Fed said it had identified “weaknesses in the assumptions used by the firm to project stressed trading losses that raise concerns about the firm’s capital adequacy and capital planning process.” It gave no further detail.
Deutsche’s passing grade reflected the significant progress the bank had made in addressing its weaknesses around capital planning, although some issues remain, according to a senior Fed official. Deutsche maintained a large presence on Wall Street after the 2007-2009 financial crisis, while Credit Suisse made big cuts. However, Deutsche’s efforts to compete with U.S. rivals have been hampered by litigation and regulatory investigations.
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