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Investors have earned the remuneration of Loser Bank supervision as Wall Street’s biggest bank announced a flood of shareholder payments on Tuesday after Wall Street’s biggest bank passed a regulatory stress test that imposed conditions easier than before.
JPMorgan, Goldman Sachs, Bank of America, Morgan Stanley and other banks said they would increase quarterly dividend payments to shareholders. Jpmorgan and Morgan Stanley said they would buy back billions of dollars of shares.
Goldman said it would raise its dividend by 33%. JPMorgan said it would increase its quarterly common stock dividend by 7% in the next quarter.
Bank of America said it would increase its quarterly common stock dividend by 8% from the same quarter. Citi and BNY also said they would increase their dividends by 7% and 13%, respectively.
JPMorgan said Morgan Stanley has announced a buyback program worth up to $20 billion and will allow it to purchase its own shares worth up to $50 billion.
The high payments reflect what analysts and investors see as a more troublesome regulatory environment for banks after more than a decade of tight restrictions in the aftermath of the 2008 financial crisis.
The bank’s stock price has hardly changed since the announcement Tuesday, but it booked recent profits as investors absorbed news of lighter stress testing requirements.
Last week, the Federal Reserve confirmed that 22 banks, from the biggest banks, such as JPMorgan and Goldman Sachs, to small players including PNC and BNY, have successfully tested annually to assess the potential and market crises of economic and market crises.
The bank uses the results to calculate the minimum level of capital required for risk-adjusted assets. Capital is used by banks to absorb losses.
This year’s stress test was the first since the Fed relaxed the scenario with a more intense theoretical recession than the previous year. The new test was designed before US President Donald Trump took over the office, but what his administration defended is in line with more looser banking regulations.
Analysts at Morgan Stanley said the Fed’s results were “better than expected” as they flagged methodological changes that led to low virtual losses, including changes in the way regulators measure private equity exposures.
“There’s a new era of banking regulations here,” an analyst at Morgan Stanley wrote in a memo earlier this week.
The Fed said this year’s tests will boost the bank’s total capital ratio of 1, down 1.8 percentage points, a major cushion against losses.
It is expected that central banks will be clear in the coming weeks whether to use the average of stress test results over the past two years to calculate the bank’s capital requirements.
As part of a broader push to facilitate bank regulation, the Fed and two other watchdogs announced plans last week to reduce their enhanced supplemental leverage ratio.