WASHINGTON The Federal Reserve Board on Friday approved Ally Financial Inc.'s revised capital plan after objecting to it earlier this year.
In March, the Fed rejected initial plans submitted by two firms, the Detroit-based Ally and BB&T Corp., following the results of the central bank's annual stress test exercise.
Regulators can reject plans by banks to issue dividends and share repurchases if there is uncertainty that an institution would be have enough capital to withstand a crisis and still be able to continue to lend.
BB&T's plan was approved in August.
In the Fed's last round of stress testing, the agency also asked JPMorgan Chase & Co. and Goldman Sachs to
The firms were criticized for not effectively estimating how a particular risk might affect their portfolio and were asked to draft new capital plans as a result.
Banks are already gearing up for the next round of stress test exercises in 2014. The Fed recently released instructions to 30 U.S. firms for the
In a statement, Ally said that the Fed's acceptance of its capital plan now satisfies a key closing condition tied to a previously announced private placement of common stock and repurchase of all mandatory convertible preferred securities held by the Treasury Department.
The company said it expects to receive roughly $1.3 billion from the private placement. In November, Ally increased the transaction by 50,000 shares for a purchase price of $300 million.
After this transaction closes Ally will have paid the Treasury $12.3 billion.
