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Banks spend billions to shareholders. We put the numbers in context.



The country's largest banks, which have made big profits ten years after the financial crisis, will pay billions of dollars to their shareholders.

The Banking Supervision Authority, the Federal Reserve, has subsequently signed the payments Banks have passed annual stress tests, the results of which were released on Thursday. The Fed carries out the tests that were introduced after the crisis to assess how large banks would evolve in a deep recession.

After the transition, the six largest US institutions are now able to make share repurchases totaling over $ 1

25 billion in dividend payments. One instructive exercise is to compare the level of required payouts of the banks with the profits that analysts expect banks to make in the second half of this year and in the first half of the next, the period covered by the capital plans. On average, these six banks plan to distribute 102 percent of their profits to shareholders.

Wells Fargo asked for the highest amount of disbursement of 141 percent of the earnings Barclays analysts expect over the next 12 months. As a punishment for a series of scandals, Fed Wells Fargo has stated that it can not increase its balance sheet until the Fed is satisfied that the bank has resolved its problems. As a result, Wells Fargo appears to be paying off capital that would otherwise have been used to finance a larger volume of credit. According to Barclays, the payout ratio in 2017 was 99 percent.

The Citigroup, whose fortunes have risen in recent years, was able to pay out 128 percent of its profit after the recent stress tests, up from 119 percent in 2017. [19659002] Morgan Stanley and Goldman Sachs have much lower numbers, 80 percent and 69 percent. In order to receive the approval of the Fed for their capital plans, both companies had to reduce their requested payments. The percentages of the two banks may be lower because the stress tests effectively give them less capital to distribute. And that could happen because the Wall Street activity tests may be harder than, say, traditional lending.

Another reason could be that Morgan Stanley and Goldman Sachs simply have less surplus capital, resulting in less scatter test cycle


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