Aug 23 Citigroup Inc and SunTrust Banks
Inc, two of the four U.S. banks that failed the Federal
Reserve's stress test in March, say the regulator has not
objected to their revised capital plans, which did not call for
dividend increases or share buybacks.
The banks, when they resubmitted their plans in June, had
said they did not ask for an additional return of capital to
shareholders this year. They can ask for increases in the next
round of stress testing, which begins in January.
The Fed stress tests, now an annual exercise, are designed
to ensure 19 large bank holding companies would have sufficient
capital to weather a hypothetical recession. As part of the
tests, the banks submit proposals for raising dividends and
buying back shares during the coming year, which need Fed
Healthier banks such as Wells Fargo & Co and U.S.
Bancorp have been able to increase returns to
shareholders, while weaker banks have had to put those plans on
hold. Citigroup and SunTrust issued statements about their
resubmitted plans on Wednesday.
Ally Financial Inc, the auto lender that is 74 percent owned
by the U.S. Treasury after a series of bailouts, in a statement
Wednesday said it continues to have "active, frequent, and
constructive discussions" with its regulators about the revised
capital plan it submitted in June.
The lender is the middle of a major transformation. In May,
its Residential Capital mortgage unit filed for bankruptcy, and
it announced plans to sell its international operations. The
actions are designed to strengthen the company's capital and
liquidity and speed up repayment of the U.S. government, Ally
The lender said it continues to have a "strong financial
profile," including a Tier 1 capital ratio of 13.7 percent of
risk-weighted assets, despite taking a charge related to the
The fourth bank holding company to fail the stress test,
insurer MetLife Inc, has received an extension until
Sept. 30 to submit a revised capital plan. MetLife is looking to
shed its bank holding company status, having struck a deal to
sell its online deposit-taking operations to General Electric
Analysts have said MetLife was likely to fail another
stress test even with a new capital plan, given that the tests
were designed for banks and not insurers.
On Tuesday, Fifth Third Bancorp said the Fed did
not object to a resubmitted capital plan that would allow it to
raise its quarterly dividend by 2 cents to 10 cents per share
and buy back additional shares. Fifth Third passed the stress
test in March, but the Fed had opposed the dividend increase and
limited the shares it could buy back, leading to the resubmitted
The Federal Reserve declined to comment on the resubmitted