Wells Fargo said Monday that it is expected to cut its dividends by an unspecified amount after an annual banking sector health stress test by the Federal Reserve, which represents the only major bank so far that has They reduce shareholder distributions after Examining the financial means of the country’s largest financial firms. Wells Fargo’s dividend is currently 51 cents, according to FactSet data. Only Wells Fargo paid cash dividends during the first quarter that exceeded its estimated four-quarter average of net income through the second quarter, according to an analysis of the bank’s payments by Phil Van Doorn of MarketWatch. Almost all of the nearly three dozen financial institutions said Monday that they kept their payments in cash, including Citigroup C,
JPMorgan Chase & Co. JPM,
Goldman Sachs Group Inc. GS,
Morgan Stanley MS,
and Bank of America BAC,
Last week, the Federal Reserve said a prolonged economic downturn could hit the country’s banks with losses of up to $ 700 billion in impaired loans and ordered them to limit dividends and suspend share buybacks to conserve funds. The vast majority of banks agreed to suspend buybacks in March when the COVID-19 pandemic took root. Last Thursday, the Fed said it would require banks to reevaluate their capital needs and resubmit their capital plans later this year. The regulator considered that all banks are well capitalized in the stress tests that have been carried out every year since the 2009 financial crisis to determine the resilience of the financial industry against major shocks to the economy. Since the Fed’s “severely adverse scenario” for testing was designed in February, before the coronavirus pandemic caused a recession, the regulator also conducted “sensitivity analyzes” to reflect the harsher economic reality.
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