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IPFS News Link • Federal Reserve

Fed To Lift Bank Buyback, Dividend Limits At End June

• by Tyler Durden

The Federal Reserve Board on Thursday announced that the temporary and additional restrictions on bank holding company dividends and share repurchases currently in place will end for most firms after June 30, after completion of the current round of stress tests. Firms with capital levels above those required by the stress test will no longer be subject to the additional restrictions as of that date. Firms with capital levels below those required by the stress test will remain subject to the restrictions.

"The banking system continues to be a source of strength and returning to our normal framework after this year's stress test will preserve that strength," Vice Chair for Supervision Randal K. Quarles said.

After two rounds of stress tests last year, the Board found that large banks had strong capital levels, which provide a cushion against losses. However, due to economic uncertainty from the COVID event, the Board put temporary and additional restrictions on capital distributions. Those restrictions limit bank dividends and share repurchases to an amount based on income over the past year.