THE current mood in America’s financial markets is enthusiasm for companies that can receive investment now with the prospect of using it to make more in the future. The exceptions are banks, for whom the ability to return capital now rather than later is seen as a critical indicator of health. On March 26th the Federal Reserve disclosed the results of its “comprehensive capital analysis and review” determining which of the country’s 30 largest banks could increase their dividends and share buybacks.The precise criteria are deliberately kept murky to stop banks gaming them, and the results produced some shocks. Most banks had their plans approved but Citigroup and the American operations of HSBC, RBS Citizens and Santander were all rejected while Goldman Sachs and Bank of America passed only by tweaking their submissions. One other institution, Zions Bancorporation, had its plan rejected as well but this had been expected because it had flunked an earlier stage of the test.For Citi, the results were a disaster. Its shares fell 6% in after-market trading. “We are deeply disappointed”, said Michael Corbat, its chief executive. Sympathy may be scarce...
from The Economist: Finance and economics http://ift.tt/1j9pWDj
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