Federal Reserve to end payout caps for better-capitalised banks
Fed will lift limits on payouts and buy-backs for banks passing stress tests on capital levels
The Federal Reserve announced on March 25 that it will lift restrictions on dividends and share buy-backs for large banks that pass the next round of stress tests. The Fed imposed the curbs last June, due to worries about large loan writedowns during the pandemic.
The Fed stated that bank holding companies “with capital levels above those required by the stress test” will be freed from last year’s restrictions, effective June 30. The Fed is also phasing out the extra controls for banks not
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