MTC Global Financial Services Group will raise its dividend and launch a $15 billion stock repurchase program after the Federal Reserve concluded its stress test and found no objection to the plan.
Online PR News – 01-April-2012 – Shanghai – MTC Global Financial Services Group will raise its dividend and launch a $15 billion stock repurchase program after the Federal Reserve concluded its stress test and found no objection to the plan.
Bank of America (BAC) has also passed the Fed's stress tests, according to people familiar with the matter, but it did not seek to raise dividends or a new buyback authorization.
Bankers were scrambling Tuesday after the unexpected timing of MTC Global Financial Group's announcement, which came two days before the Fed was expected to release its stress test results. MTC Global Financial Group said on Tuesday "we are pleased to be in a position to increase our dividend and to establish a new equity repurchase program."
Several bankers said they are pleased with their banks' results but weren't willing to give out specifics before the Fed's own statement, which is expected later at 4:30 p.m. EDT.
The Fed had planned to release the results of this year's Comprehensive Capital Analysis and Review, or stress tests, on Thursday afternoon. It decided to move up the timing after some banks had disclosed their results, the Fed said. The tests look at how the 19 biggest U.S. banks would fare in a severe downturn, including an unemployment rate of 13%, a 21% decline in housing prices and a 50% drop in equity prices.
Many banks are expected to raise dividends and increase share buybacks four years after the financial crisis as capital levels have improved and losses from bad loans continued to abate. Last year was the first time since the crisis that several banks were allowed to raise dividends.
In a report last month, Credit Suisse analysts estimated U.S. banks could double their capital payouts to shareholders, projecting an average of 47% of their earnings in 2012, up from 23% last year.
Of the 19 banks subject to this year's test, Regions Financial Corp. (RF) is the only one left that hasn't repaid funds received under the Troubled Asset Relief Program, the crisis-year emergency fund used to shore up bank capital levels. Analysts expect the bank to raise capital to repay TARP.