Stock dividends

The Fed’s recent action capping dividend payments might prove inadequate once the coronavirus crisis really hits banks’ capital.

As PPP enters forgiveness phase, some banks see outsourcing as best move; after the Fed’s stress tests, Wells Fargo to cut dividend while other big banks boost capital buffer; Supreme Court strikes down CFPB leadership structure; and more from this week’s most-read stories.

While elevated loan-loss provisions are expected to eat into all banks’ earnings, midsize banks could suffer more than their big-bank rivals because they have fewer revenue drivers. Meanwhile, investors will be watching closely for any signs of dividend cuts stemming from the Federal Reserve’s caps on payouts.

Supreme Court says the president has the power to remove the director at will; the bank is the only one of the six largest U.S. banks to say it will cut its dividend next quarter.

Wells Fargo customers targeted with phishing attacks using calendar invites; Fed freezes stock buybacks, caps dividends after stress test results; Citigroup names Titi Cole its head of global operations and fraud prevention.

The Fed stopped short of banning payouts entirely following bank stress tests; banks get greater freedom to invest in venture capital funds and reduced collateral on swap trades.

The senior official said the Federal Reserve’s gauge of a firm’s performance under economic recovery scenarios will affect decisions about its capital distribution, but individual results of the analysis will not be made public.

Unlike in previous years, the results from two different evaluations will be released simultaneously and will include an assessment of bank capital under coronavirus-related scenarios.

The general structure of this year’s reviews is unchanged despite the pandemic. But a supplemental analysis of banks' response to the downturn could weigh heavily in evaluating 2020 capital distributions and making adjustments to the tests over the long run.

Payouts continue to be relatively generous, but that could change if the Federal Reserve demands banks bolster capital or the economy worsens.