Cap Markets

Some of the 23 large banks that participated in last week’s stress tests will be better positioned to reward shareholders than others, since they padded their capital amid the pandemic. Still, all are expected to tread cautiously amid ongoing economic uncertainty.

Four companies — Regions Financial, MUFG Americas Holdings and the U.S. arms of the Royal Bank of Canada, BMO Financial— felt they had something to prove to the Federal Reserve after being assigned higher capital buffers than most of their peers last year. Will their decisions pay off for shareholders?

The Federal Reserve found that under its harshest stress-test scenario, bank capital ratios would decline to 10.6% on average — well above the 4.5% minimum requirement. Restrictions imposed on dividend payments and share repurchases during the economic crisis last year will be lifted after June 30.

How the pandemic is accelerating trends in financial advice and changing the way Americans manage their money.

The biggest U.S. banks, led by JPMorgan Chase and Bank of America, are expected to pay out $142 billion in capital to shareholders after clearing this year’s stress tests.

The huge buffers that banks built up over the pandemic are protecting the financial system from looming threats, regulators told President Biden during a meeting that also touched on climate change, extension of credit to the underserved and other topics.

Federal Reserve Chairman Jerome Powell said the market dislocations of the past year resulting from the pandemic had changed the impact that the supplementary leverage ratio was having on the largest banks. After temporarily easing the requirement, the central bank is considering longer-term reforms.

In the past five years combined only 14 banks failed to meet the minimum market capitalization for inclusion in the index. In this year's rebalancing, 82 are being removed and some may have to consider strategic options to appease investors.

Federal Reserve Vice Chair of Supervision Randal Quarles suggested that the massive influx of reserves stemming from the central bank's COVID-19 response may lead to a recalibration of the supplementary leverage ratio.

In her role as senior vice president of credit for municipal and corporate bonds, Urtz is overseeing a redesign of FHN's primary website for fixed-income transactions.