FED Extends Dividend Restrictions of Banks

FED Extends Dividend Restrictions of Banks The FED extends the dividend restrictions of banks. In addition to dividends, share repurchase restrictions were also extended until the end of the year. The US Federal Reserve (FED) announced that the restrictions on share repurchase and dividend payments of the largest banks in the country were extended until the end of the year due to the economic uncertainty caused by the new type of Coronavirus (Covid-19) outbreak. In the statement made by the FED, it was stated that due to the continuing uncertainty caused by the Coronavirus (Covid-19) epidemic, new measures were taken to ensure that large banks maintain high capital flexibility. Within the framework of these measures, it was informed that the restrictions on share repurchase, which were expected to be applied in the third quarter of this year for banks with total assets of more than $ 100 billion, have been extended until the end of the fourth quarter. On the other hand, in the bank's statement, it was noted that dividend payments will be limited and will be linked to a formula based on recent income. It was stated that a second stress test will be conducted for large banks and the results will be announced by the end of the year. The US Federal Reserve (FED) announced in June that the largest US banks that it stressed will have to suspend share buybacks and limit dividend payments in the third quarter of this year.