U.S.’s biggest banks face restrictions on dividends and share buybacks for three months of Q4, according to The Wall Street Journal.  Federal Reserve cites need to conserve capital in the pandemic-induced downturns. 33 banks with over $ 100 billion asset worth to be affected, as Q3 restrictions were expiring on Wednesday.

  • Restrictions will allow large banks build capital resilience- Fed. 
  • Big banks will undergo a second round of stress tests later in the year, based on two coronavirus-linked recession scenarios.
  • Stress test results, designed to ensure banks continue lending in a crisis, to be announced later in the year.
  • Capital positions of large banks remained strong in Q3 while restrictions were in place.

Big banks’ stocks responding favorably to the share buyback and dividend restrictions. WFC: NYSE is up 1.07%, JPM: NYSE stock is up 0.96%, BAC: NYSE stock is up 0.71%, XLF stock is up 1.35%.