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U.S. banks to defend dividend payments in stress tests: FT

Stock MarketsApr 05, 2020 01:10PM ET
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3/3 © Reuters. Police stand guard as activists hold placards outside a Citibank branch in protest against banks funding the Dakota Access Pipeline during a Divestment Day rally in Manhattan 2/3

NEW YORK (Reuters) - U.S. banks are expected to defend their dividend payments when they submit their annual capital plans to the Federal Reserve on Monday for the upcoming stress tests, the Financial Times reported on Sunday, citing people familiar with the situation.

U.S. lenders face growing pressure to follow their European counterparts and non-financial companies and cut dividends, as the coronavirus crisis puts a record number of people out of work, which could make it harder for borrowers to repay loans. Banks may need cash to cover those losses, critics argue.

But over the past week, executives from Citigroup Inc (N:C), Morgan Stanley (N:MS) and Goldman Sachs Group Inc (N:GS) have defended their plans to continue paying dividends to shareholders, saying their banks are well-capitalized enough to do so.

Wall street analysts, who initially thought it was impossible banks would cut dividends, are now saying it is more likely that banks, particularly those with large credit card businesses, will cut dividends later this year.

On March 27, the European Central Bank told its lenders to skip dividends and share buy backs until at least October, estimating they could save 30 billion euros by doing so.

U.S. banks to defend dividend payments in stress tests: FT
 

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Comments (6)
Frank Leisner
Frank Leisner Apr 05, 2020 4:40PM ET
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If they are well capitalized why did the fed have to pump trillions into the banking system?
Ernie Keebler
Ernie Keebler Apr 05, 2020 3:47PM ET
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How many millions of preferred shares do the banks execs own as compared to the average investor? Just another mismanagement bonus to the elite
Ernie Keebler
Ernie Keebler Apr 05, 2020 3:43PM ET
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Yes we should let the bailed-out, fined billions at pennies on the dollar crooked scheme after crooked scheme greedy banks do whatever they please
john richards
john richards Apr 05, 2020 3:13PM ET
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Make sure to thank your local always wrong leftist for obliterating the banking and insurance models via the emergency measures still in place 10yrs later known as 0percent rates.
Brent He
Brent He Apr 05, 2020 2:13PM ET
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Banks should be more free. So sick of the Fed guidelines ruining all opportunity in banking. They make it more difficult to loan to people WE WANT TO LOAN TO.
Walter Zubruski
Walter Zubruski Apr 05, 2020 1:55PM ET
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Are they trying to make banks be uninvestible right now?
 
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