Fed's 2nd round of stress tests done in groups

CHARLOTTE, N.C. Fri Jan 21, 2011 11:51pm IST

Morning commuters drive past the Federal Reserve Bank building in Washington March 18, 2009.  REUTERS/Jonathan Ernst/Files

Morning commuters drive past the Federal Reserve Bank building in Washington March 18, 2009.

Credit: Reuters/Jonathan Ernst/Files

Related Topics

CHARLOTTE, N.C. (Reuters) - The Federal Reserve is splitting stress tests for the 19 largest U.S. banks into two groups, depending on when the lenders want to increase their dividend in 2011, Bank of America Corp Chief Financial Officer Charles Noski said.

In an interview with Reuters on Friday, Noski said the U.S. central bank was first reviewing the capital plans for banks that want to raise dividends by mid-year 2011.

Banks that are targeting a dividend increase for the second half of the year will have their test results released later as part of a second group. Lenders in this group may have to submit supplemental financial information, Noski said.

U.S. regulators conducted a first round of stress tests in the spring of 2009 to test the adequacy of capital reserves at big banks and to pave the way for the return of private capital after they took billions of dollars in taxpayer rescue funds.

Bank of America, the largest U.S. bank by assets, plans to raise its dividend, now at 1 cent per share, in the second half of 2011, if it receives Fed approval.

The bank slashed the quarterly shareholder payout after receiving $45 billion in U.S. government bailout aid at the height of the financial crisis in 2008.

Noski said the bank planned a "modest increase" in the shareholder payout, but declined to say what the increase would be.

BofA reported on Friday a fourth-quarter shareholder loss of $1.57 billion.

On Jan. 14, Fed Governor Daniel Tarullo said the central bank wants lenders to be careful about raising dividends during the modest economic recovery.

"There are still risks out there," Tarullo said in an interview with financial news network CNBC.

Banks would have to show they can absorb losses over the next two years, Tarullo said, and comply with new banking industry capital rules.

(Reporting by Joe Rauch; Editing by Lisa Von Ahn and Tim Dobbyn)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Adani Project

Adani Project

Australia approves Adani's $16 bln Carmichael coal project  Full Article 

India-U.S. Talks

India-U.S. Talks

Kerry to woo Modi's India, but quick progress unlikely  Full Article 

Paring Debt

Paring Debt

Jaiprakash to sell hydro plants to Reliance Power  Full Article 

Nifty Falls

Nifty Falls

The broader index hits lowest in nearly a week on profit taking  Full Article 

Mideast Conflict

Mideast Conflict

U.N. Security Council calls for humanitarian ceasefire in Gaza  Full Article 

Market Eye

Market Eye

Foreign investors prefer Indian cyclicals, utilities - Macquarie  Full Article 

Debt Investment

Debt Investment

India's FII debt limit hike credit-positive, says Moody's  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage