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Thursday, March 28, 2024

Fed tweaks banking restrictions to allow some buybacks, dividends

The second Federal Reserve stress test of 2020 found that the banking system remained resilient but uncertainty lingers.

WASHINGTON: The Federal Reserve on Friday eased rules on major US banks meant to protect the financial system during the Covid-19 pandemic, allowing share buybacks and dividends to resume in certain circumstances.

The central bank this year ordered 34 major US banks to suspend share buybacks in the last two quarters of 2020 and to limit dividend payments.

However on Friday the Fed modified its regulations, saying for the January-March period of next year, “both dividends and share repurchases will be limited to an amount based on income over the past year.”

Firms not earning income won’t be able to pay dividends or make share repurchases, the central bank said.

Shortly after the…

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