Tag: Wells Fargo

How green is the green finance promise of global banks?, BFSI News, ET BFSI

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Most global banks have signed Gfanz (the Glasgow Financial Alliance for Net Zero) at COP26 UN Climate Change Conference pledging to report annually on the carbon emissions linked to the projects they lend to.

Major signatories to the initiative, which aims to provide trillions of dollars in green finance, include Citi, Morgan Stanley and Bank of America. However, earlier efforts to promote green financing have not met with a serious response.

Principles of responsible banking

In 2019, the UN General Assembly exuberantly launched its principles of responsible banking (PRBs) where signatory banks agreed to work with their clients to encourage sustainable practices and to align their business strategy to the UN sustainable development goals and the Paris climate agreement.

Also, many of the biggest banks have not signed the PRBs, even though the principles have been the gold standard until now for committing to decarbonising lending.

Of the top ten banks (by market capitalisation), only Citi, Commercial Bank of China (ICBC), Bank of China and Agricultural Bank of China are signatories to PRBs. JPMorgan Chase, Bank of America, China Construction Bank, Wells Fargo, Morgan Stanley and China Merchants Bank are not on the list.

This is despite it being a limited commitment. Signatories have four years to comply with the principles, and signatories are not penalised or even named and shamed for failing to live up to the principles.

How banks fare

Among the major signatories to PRBs, Citi was the third-biggest fossil fuel lender in 2016-19 after the Paris Agreement and reached second place in 2020.

MUFG and ICBC, who are also signatories to the PRBs, both grew their fossil-fuel lending over the period. MUFG is also a Gfanz member, though neither ICBC nor any of the other Chinese banks are part of the new initiative.

Meanwhile, Wells Fargo and JP Morgan, which were not signatories to PRBs, reduced their total fossil fuels lending each year from 2018 to 2020, by 57% and 23% respectively.

Signatories to the PRBs are also supposed to carry out environmental-impact assessments and to measure the greenhouse gas emissions of projects. They are also supposed to ensure that loans go to projects that are carbon neutral. However, very little of this is happening on the ground at present.

While there is a need for a scheme that makes PRBs compulsory and binding, Gfanz does not tick the boxes. Under it, annual reporting requirements on carbon emissions are not mandatory either.

Experts say instead of forbidding lending to non-green projects now, loan books need to be treated as a portfolio of projects in different hues of green, with a defined trajectory towards greener – but it needs to be mandatory for signatories.



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All banks will soon consider offering crypto trade, says former Citi CEO Vikram Pandit, BFSI News, ET BFSI

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Vikram Pandit, the Indian-born former CEO of Citigroup Inc and co-founder of Orogen Group, has said that banks and traditional financial institutions will soon start thinking of offering cryptocurrencies.

Pandit aired his view on the future of cryptocurrencies in an interview at a Singapore Fintech Festival. Vikram Pandit noted that in a few years to come large banks and other financial institutions will start offering crypto services directly to their customers.

“In one to three years, every large bank and, or securities firm is going to actively think about ‘shouldn’t I also be trading and selling cryptocurrency assets?”, he asked.

Vikram Pandit is a popular investor and a long-time admirer of cryptocurrencies, he has previously largely invested in one of the leading cryptocurrency exchanges, Coinbase.

The investor expects the introduction of digital assets to be an upgrade to the paper-based banking system to make the exchange process more suitable.

Banks bet on crypto

Meanwhile, banks and other financial institutions are already taking steps and seeking ways to enter the crypto industry.

As per a recent report, banks are now paying a 50% premium to employ crypto talents. The banks are making this move because they risk losing their customers to other banks or financial institutions that offer these crypto services.

According to data collected by Revelio Labs, a workforce intelligence company, Wells Fargo, Goldman Sachs, Citibank, and Morgan Stanley are among the companies hiring these crypto talents.

Coinfomania reported last week that Australia’s Commonwealth Bank (CBA) is set to become the first banking institution in the country to offer crypto services to its clients.

The bank noted that it will allow its customers the ability to buy, sell and hold digital assets, directly via the CommBank app.

With the country’s financial watchdog looking into the regulatory implications of the bank’s move, CBA has said it would welcome clear regulatory guidelines for crypto assets.

However, while these traditional financial systems are offering clients exposure to crypto assets, none of them has decided to trade crypto directly to their clients, and that is about to change soon, according to Pandit.



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US banks report big profit jumps amid improving economy, BFSI News, ET BFSI

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A trio of large US banks reported signficantly higher profits Thursday, boosted by a strengthening US economy that has diminished the need to set aside funds for loan defaults.

Bank of America‘s results were lifted by the release of $1.1 billion in reserves, while Citi’s got a $1.2 billion boost. Wells Fargo‘s quarter was helped by a $1.7 billion reduction in provisions.

“We reported strong results as the economy continued to improve and our businesses regained the organic customer growth momentum we saw before the pandemic,” said Bank of America Chief Executive Bryan Moynihan.

Large banks set aside billions of dollars early in 2020 amid fears that lockdowns to address Covid-19 would lead to a global depression.

But the results are the latest indication that consumers remain in relatively healthy shape, thanks in part to robust fiscal support programs from Washington and accommodative monetary policy that has boosted the housing and equity markets.

Wells Fargo Chief Executive Charlie Scharf pointed to the “low” number of charge-offs, a sum that creditors believe will not be paid.

Many economists believe the United States could be well positioned for growth, but warn that worsening inflation could weigh on activity and compel the Federal Reserve to lift interest rates more quickly than expected.

On Wednesday, JPMorgan Chase Chief Executive Jamie Dimon said investors should not put “too much focus” on inflation and supply chain problems, pointing to a strong IMF forecast for continued growth in 2021 and 2022.

“You can have good growth and some inflation,” Dimon said. “That’s okay.”

Citi Chief Financial Officer Mark Mason took a similar position Thursday, calling solid growth “the good news” in the economy.

“There are a number of those moving pieces that are out there,” Mason said in response to a question about supply chain problems. “Over time they start to normalize… and we’re optimistic that they will.”

Citi reported profits of $4.6 billion, up 48 percent from the year-ago level on a one percent drop in revenues to $17.2 billion.

Bank of America scored a 58 percent jump in profits to $7.7 billion on a 12 percent rise in revenues to $22.8 billion.

Wells Fargo reported profits of $5.1 billion, up 59 percent on a 2.5 percent drop in revenues to $18.8 billion.

Shares of Citi gained 0.2 percent to $70.37 while Bank of America rose 2.5 percent to $44.24 in morning trading. Wells Fargo dipped 0.2 percent to $45.96.

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Wells Fargo report, BFSI News, ET BFSI

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The financial sector accounts for 19% of the country’s GDP, up from 13% in 2000.

As banks bet more on digital banking, nearly 100,000 positions in US banks are at stake and could vanish over the next five years, a report by Wells Fargo said.

Large US banks are investing more in digital banking and other technologies, which could vanish roles of branch managers, call center employees and tellers, leading to massive job cuts in the sector.

Disappearance of such jobs could be drawn parallel with the massive contraction in manufacturing work in the 1980s and ’90s, according to the report.

“Our conclusion is still that this will be the biggest reduction in US bank headcount in history,” the analysts wrote, with job cuts accelerating once the economy fully recovers from the COVID-19 pandemic.

These roles are predicted to be replaced by artificial intelligence, cloud computing and robots. These technological advances are set to perform daily banking functions like taking payments, approving loans and detecting fraud, the report said.

“Branches will likely show a decline, especially given greater digital banking adoption during the pandemic. Many branches that were closed during the pandemic will likely remain closed permanently [and] new future mergers will likely reduce branches, too,” the report said.

The financial sector accounts for 19% of the country’s GDP, up from 13% in 2000. Since the 2008 financial crisis, big banks have continued to witness larger growth. However, between 2007 and 2018, rapid automation in the sector led the country’s four largest banks to reduce staff by a combined 3,00,000 positions.



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UPDATE 3-Wells Fargo must face shareholder fraud claims over its recovery from scandals, BFSI News, ET BFSI

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(Adds comment from lawyer for ex-CEO Sloan, changes dateline from Sept. 30)

NEW YORK, – A federal judge on Thursday rejected Wells Fargo & Co’s bid to dismiss a lawsuit claiming it defrauded shareholders about its ability to rebound from five years of scandals over its treatment of customers.

The fourth-largest U.S. bank has operated since 2018 under consent orders from the Federal Reserve and two other U.S. financial regulators to improve governance and oversight, with the Fed also capping Wells Fargo’s assets.

Shareholders said bank officials falsely claimed in TV interviews, analyst calls and congressional testimony that the bank was mending its ways, when regulators actually viewed its progress as “deficient” and “unacceptable.”

U.S. District Judge Gregory Woods in Manhattan said the shareholders plausibly alleged that some statements by various bank officials, including former Chief Executive Tim Sloan, were “deliberately or recklessly false or misleading.”

According to shareholders, San Francisco-based Wells Fargo lost more than $54 billion of market value as the truth was gradually revealed over a two-year period ending in March 2020.

Woods also dismissed claims against current Chief Executive Charles Scharf, saying he was not culpable for the challenged claims.

The scandals prompted Warren Buffett‘s Berkshire Hathaway Inc to shed nearly all of its 10% stake in the bank.

“We will continue to vigorously defend the litigation and strongly disagree with the claims,” Wells Fargo said in an email.

Sloan’s lawyer Josh Cohen said in an email on Friday that his client’s statements were truthful, and that Sloan “worked tirelessly to bring Wells Fargo into compliance with consent orders and regulatory demands.”

The decision is a setback for Wells Fargo’s rebound from revelations including that it opened about 3.5 million accounts without customer permission, and charged hundreds of thousands of borrowers for auto insurance they did not need.

Wells Fargo has paid more than $5 billion in fines, and the Fed’s $1.95 trillion asset cap restricts the bank’s growth.

Sloan stepped down abruptly as chief executive after 2-1/2 years in March 2019. One year later, Wells Fargo canceled a $15 million bonus for him.

In his 61-page decision, Woods did not decide whether bank officials intended to defraud shareholders.

But he said it would have been “nearly impossible” for Sloan to be unaware of the regulators’ criticisms.

“Based on the facts on the ground, Mr. Sloan knew or, more importantly, should have known that he was misrepresenting material facts related to the corporation,” Woods wrote.

The shareholders are led by the state of Rhode Island, and pension funds in Louisiana, Mississippi and Sweden.

Their lawyer Steven Toll said he was pleased they can sue over the “vast majority of the alleged fraudulent statements.”

The case is In re Wells Fargo & Co Securities Litigation, U.S. District Court, Southern District of New York, No. 20-04494. (Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis, Aurora Ellis and Cynthia Osterman)



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Banks closing thousands of branches in US, UK as customers go digital, BFSI News, ET BFSI

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Retail banks are shutting thousands of branches and reducing staff in the US and the UK as they see most of the branch visitors who went digital during lockdowns may not come bank.

Fears among employees and customers of contracting Covid has also shut down many bank branches in the US.

Marquee banks

Wells Fargo, Citigroup and JPMorgan closed more than 250 branches in the first half of the year, which accounted for 1 to 5 per cent of their networks. The banks plan more reductions.

Wells Fargo, which had the highest branch count in the US at the start of the year, closed 154 branches, or 3 per cent of its domestic network, and reducing headcount by 6 per cent.

Citigroup cut its global branch count by roughly 100, or 4 per cent, with the closures spread across the US, Mexico and Asia. JPMorgan closed about 40 branches, or 1 per cent of its network.

The cuts represent a shift from the years leading up to the pandemic, when large US banks started opening new branches in a bid to grow their deposits after nearly a decade of cutbacks following the last financial crisis.

Other bank closures

New Jersey-based TD Bank had said earlier this year it will close 81 of its 1,223 retail branches in the US by April.

Cleveland-based KeyCorp said it will close at least 70 branches, about 7% of its total network, by mid-year, as more customers switch to digital transactions.

Huntington Bancshares of Ohio will close 198 branches in connection with its planned acquisition of TCF Financial Corp. of Detroit, by the second quarter of this year.

Bank of Hawaii recently announced the closure of 12 branches, while National Bank Holdings of Colorado will shutter seven branches by June 30.

Why are they shutting shop?

Low interest rates have also squeezed banks’ net interest margins, prompting them to cut operational costs elsewhere.

Banks are seeing the percentage of transactions being completed digitally constantly rising and have to think about how many branches they have. The pandemic has speeded up the shift to digital services.

The UK

More than 4,000 bank branches in the UK have closed in the past six years as lenders increase digital services for customers, said S&P Global Market Intelligence, citing data from UK consumer advocacy group Which.

In 2020, 368 bank branches alone shut down in the UK, led by Barclays which closed 105.

Already in 2021, TSB Bank plans to close 155 branches, Santander UK will shutter 111, HSBC Holdings, 82 and Barclays, 63.

Staring at extinction?

A report from Self Financial, a fintech firm, has a dire forecast for US bank branches last year. It predicts branches may become extinct by 2034. Based on trends, including the doubling of the rate of bank closures every three years, Self said the number of bank branches could fall to 40,000 by 2027 and then plunge to as low as 16,000 by 2030, the same level as in 1965. By 2034, Self all branches may be gone, it said.



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Banks closing thousands of branches in US, UK as customers go digital, BFSI News, ET BFSI

Banking & Finance

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Retail banks are shutting thousands of branches and reducing staff in the US and the UK as they see most of the branch visitors who went digital during lockdowns may not come bank.

Fears among employees and customers of contracting Covid has also shut down many bank branches in the US.

Marquee banks

Wells Fargo, Citigroup and JPMorgan closed more than 250 branches in the first half of the year, which accounted for 1 to 5 per cent of their networks. The banks plan more reductions.

Wells Fargo, which had the highest branch count in the US at the start of the year, closed 154 branches, or 3 per cent of its domestic network, and reducing headcount by 6 per cent.

Citigroup cut its global branch count by roughly 100, or 4 per cent, with the closures spread across the US, Mexico and Asia. JPMorgan closed about 40 branches, or 1 per cent of its network.

The cuts represent a shift from the years leading up to the pandemic, when large US banks started opening new branches in a bid to grow their deposits after nearly a decade of cutbacks following the last financial crisis.

Other bank closures

New Jersey-based TD Bank had said earlier this year it will close 81 of its 1,223 retail branches in the US by April.

Cleveland-based KeyCorp said it will close at least 70 branches, about 7% of its total network, by mid-year, as more customers switch to digital transactions.

Huntington Bancshares of Ohio will close 198 branches in connection with its planned acquisition of TCF Financial Corp. of Detroit, by the second quarter of this year.

Bank of Hawaii recently announced the closure of 12 branches, while National Bank Holdings of Colorado will shutter seven branches by June 30.

Why are they shutting shop?

Low interest rates have also squeezed banks’ net interest margins, prompting them to cut operational costs elsewhere.

Banks are seeing the percentage of transactions being completed digitally constantly rising and have to think about how many branches they have. The pandemic has speeded up the shift to digital services.

The UK

More than 4,000 bank branches in the UK have closed in the past six years as lenders increase digital services for customers, said S&P Global Market Intelligence, citing data from UK consumer advocacy group Which.

In 2020, 368 bank branches alone shut down in the UK, led by Barclays which closed 105.

Already in 2021, TSB Bank plans to close 155 branches, Santander UK will shutter 111, HSBC Holdings, 82 and Barclays, 63.

Staring at extinction?

A report from Self Financial, a fintech firm, has a dire forecast for US bank branches last year. It predicts branches may become extinct by 2034. Based on trends, including the doubling of the rate of bank closures every three years, Self said the number of bank branches could fall to 40,000 by 2027 and then plunge to as low as 16,000 by 2030, the same level as in 1965. By 2034, Self all branches may be gone, it said.



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Biggest U.S. banks smash profit estimates as economy revives, BFSI News, ET BFSI

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By Michelle Price

WASHINGTON – The four largest U.S. consumer banks posted blockbuster second-quarter results this week, after pandemic loan losses failed to materialize and the U.S. economy began roaring back to life.

Wells Fargo & Co, Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co posted a combined $33 billion in profits, buoyed by the release of $9 billion in reserves they had put aside last year to absorb feared pandemic losses.

That was beyond analyst estimates of about $24 billion combined, compared with $6 billion in the year-ago quarter.

Consumer spending has climbed, sometimes beyond pre-pandemic levels, while credit quality has improved and savings and investments have risen, the banks said.

Thanks to extraordinary government stimulus and loan repayment holidays, feared pandemic losses have not materialized. A national vaccination roll-out has allowed also Americans get back to work and to start spending again.

Sizzling capital markets activity has also helped the largest U.S. banks, with Goldman Sachs Group Inc reporting a $5.35 billion profit, more than double its adjusted earnings a year ago.

“The pace of the global recovery is exceeding earlier expectations and with it, consumer and corporate confidence is rising,” Citigroup Chief Executive Officer Jane Fraser said.

That was reflected in a pick-up in consumer lending.

For example, JPMorgan said combined spending on its debit and credit cards rose 22% compared with the same quarter in 2019, when spending patterns were more normal.

Spending on Citi-branded credit cards in the United States jumped 40% from a year earlier, but with so many customers paying off balances its card loans fell 4%.

Citigroup Chief Financial Officer Mark Mason said the bank expects more customers to go back to their pre-pandemic pattern of carrying revolving balances as government stimulus programs wind down later this year.

Wells Fargo posted a 14% gain in credit-card revenue compared with the second quarter of 2020, due to higher point-of-sale volume. Revenue was up slightly on the first quarter, the bank said.

“What we’re seeing is people starting to spend and act more in a way that seems more like it was before the pandemic started and, certainly on the consumer side, spending is up quite a bit, even when you compare it to 2018,” Wells Fargo chief financial officer Mike Santomassimo told reporters.

While loan growth is still tepid, which is usually bad for bank profits, there were signs that demand is creeping back.

Excluding loans related to the U.S. government’s pandemic aid program, loan balances at Bank of America, for example, grew $5.1 billion from the first quarter.

“Deposit growth is strong, and loan levels have begun to grow,” Bank of America CEO Brian Moynihan said in a statement.

JPMorgan, the country’s largest lender, on Tuesday reported profits of $11.9 billion compared with $4.7 billion last year.

Citigroup’s second-quarter profit rose to $6.19 billion, up from $1.06 billion last year, while Bank of America’s profit jumped to $8.96 billion from $3.28 billion.

Wells Fargo posted a profit of $6 billion compared with a loss of $3.85 billion last year, which was largely related to special items.

While the results indicate good news for consumers and businesses, low interest rates, weak loan demand and a slowdown in trading will probably weigh on results going forward, analysts said.

The U.S. Federal Reserve is staying the course, with an inflation target of 2% and no plans to tighten monetary policy by, for instance, raising interest rates, Fed Chair Jerome Powell said in prepared remarks for a congressional appearance on Wednesday.

That suggests banks will have to deal with low rates for an extended period of time.

(Reporting by Michelle Price; additional reporting by Noor Zainab Hussain, David Henry and Matt Scuffham; Editing by Lauren Tara LaCapra and Nick Zieminski)



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Global big banks plot back-to-office plans as vaccines roll out, BFSI News, ET BFSI

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The biggest banks in the world plan to re-open their offices, emboldened by aggressive vaccination drives and falling COVID-19 cases in major financial hubs, after sending most employees home early last year to help stem the spread of the coronavirus.

Banks globally are adopting different methods to ensure a successful back-to-office plan including hybrid working models and vaccination drives.

Here is the state of play with back-to-office plans in various regions:

UNITED STATES

Wells Fargo & Co

The bank said in March it plans to start bringing workers back to its offices after Labor Day due to the increasing availability of vaccines. The company is evaluating whether to allow certain businesses or functional subgroups in the U.S. to return to the workplace before Labor Day.

Goldman Sachs Group Inc

The bank planned to bring U.S. employees back to the office by mid-June.

JPMorgan Chase & Co

The largest U.S. bank will bring its employees in the United States back to the office on a rotational basis from July and plans to maintain a 50% occupancy cap during the return-to-office phase.

The bank also plans to step up the return of all of its employees in England to working at least part of their week in its offices from June 21.

Citigroup Inc

CEO Jane Fraser said in a memo in March that post-pandemic, most of the employees would be able to work in a “hybrid” setting, allowing them to work from home for up to two days a week.

Morgan Stanley

The bank’s chief executive officer, James Gorman, said if most employees are not back to work at the bank’s Manhattan headquarters in September, he will be “very disappointed”.

Gorman said his bank’s policy will vary by location, noting the firm’s 2,000 employees in India will not return to offices this year.

The bank’s staff and clients will not be allowed to enter its New York offices if they are not fully vaccinated, according to a source familiar with the matter. Employees, clients, and visitors will be required to attest to being fully vaccinated to access the bank’s offices in New York and Westchester, the source said.

Bank of America Corp

The lender expects all of its vaccinated employees to return to the office after Labor Day in early September, and will then focus on developing plans to bring back unvaccinated workers to its sites, Chief Executive Officer Brian Moynihan told https://bloom.bg/3gyALn3 Bloomberg News in an interview.

UNITED KINGDOM

Barclays

CEO Jes Staley has said the bank will adopt a hybrid working model and will reduce its real estate footprint but maintain its main offices in London and New York.

HSBC Holdings

HSBC has said it plans to cut its global office footprint by around 40% as it moves to a hybrid working model for most employees. The lender moved 1,200 call center staff in Britain to permanent home working contracts, Reuters reported in April, going further than some rivals in cementing changes to working patterns.

Lloyds Banking Group

Britain’s biggest domestic bank is hoping to resume office-based trials and experiments with around 5,000 of its staff this summer, once government restrictions allow. The lender has said it plans to cut 20% of its office space over two years.

Standard Chartered

StanChart said it will make permanent the flexible working arrangements introduced during the pandemic, and that it could cut a third of its office space in the next three to four years.

NatWest

CEO Alison Rose has said the bank is likely to adopt a hybrid working model, but has stressed offices will remain important as a place to bring people together to collaborate.

GERMANY

Deutsche Bank

Deutsche Bank in London plans to bring more staff back from June 21, assuming the city’s lockdown restrictions are loosened, according to a person with knowledge of the matter.

Germany’s largest lender has also told its investment bankers in the U.S. that it expects them to resume working from office no later than Labor Day, according to a memo seen by Reuters. The bank earlier said it was following a regional approach to the pandemic and return to the office issues, reflecting the different situations in individual countries.

SWITZERLAND

Credit Suisse

Credit Suisse in July 2020 launched a global program evaluating various work-from-home options, which are expected to shape its post-pandemic working models. It has been monitoring and adapting work arrangements since launching work-from-home globally in March 2020, taking into account local guidelines.

UBS

UBS Chairman Axel Weber in May said flexibility would remain part of work arrangements at Switzerland’s biggest bank going forward, where roles allow. Return to office plans vary from region to region, in accordance with local government guidelines.

CANADA

Royal Bank of Canada, the country’s largest lender, is exploring a flexible and hybrid work arrangement to bring its employees back to the office, Chief Executive Officer David McKay said.

Source: Company statements, memo, sources (Reporting by Noor Zainab Hussain and Niket Nishant in Bengaluru, Iain Withers and Lawrence White in London, Tom Sims in Frankfurt and Oliver Hirt in Zurich, and Matt Scuffham and Elizabeth Dilts Marshall in New York; Editing by Anil D’Silva and Ramakrishnan M.)



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Global banks announce bumper dividends, but Indian peers face a cap, BFSI News, ET BFSI

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Global wall street banks are hiking dividend payouts after US Federal Reserve gave them go-ahead last week after annual stress test results. However, the Indian bank shareholders have to wait has curbed banks’ dividend-paying ability in the financial year 2020-21 citing the impact of an ongoing second wave of coronavirus.

Morgan Stanley, JPMorgan, Bank of America, Goldman Sachs and Wells Fargo said on Monday they were hiking their capital payouts after the US Federal Reserve gave them a clean bill of health following their annual “stress tests”.

Analysts and investors had expected the country’s largest lenders to start issuing as much as $130 billion in dividends and stock buybacks from next month after the Fed last week ended emergency pandemic-era restrictions on how much capital they could give back to investors.

Morgan Stanley

Morgan Stanley delivered the biggest surprise to investors, saying it would double its dividend to 70 cents a share in the third quarter of 2021.

The Wall Street giant also said it would increase spending on share repurchases.

Morgan Stanley CEO James Gorman said in the announcement that the bank could return so much capital because of the excess it has accumulated over several years. The action, he said, “reflects a decision to reset our capital base consistent with the needs we have for our transformed business model.”

Bank of America

Bank of America Corp said it will hike its dividend by 17% to 21 cents a share beginning in the third quarter of 2021, and JPMorgan Chase & Co said it will go to $1.00 a share from 90 cents for the third quarter.

Goldman Sachs Group said it planned to increase its common stock dividend to $2 per share from $1.25.

Wells Fargo

Wells Fargo & Co, which has built up capital more rapidly than rivals due in part to a Fed-imposed cap on its balance sheet, said it plans to repurchase $18 billion of stock over the four quarters beginning in September.

The repurchase target amounts to nearly 10% of its stock market value and is line with expectations from analysts.

Wells Fargo, which for years has been trying to move past a series of costly mis-selling scandals, said it was doubling its quarterly dividend to 20 cents a share, consistent with analyst expectations.

“Since the COVID-19 pandemic began, we have built our financial strength … as well as continuing to remediate our legacy issues,” CEO Charlie Scharf said in a statement.

“We will continue to do so as we return a significant amount of capital to our shareholders,” Scharf added.

Citigroup

Citigroup, meanwhile, confirmed analysts’ estimates that a key part of its required capital ratios had increased under the stress test results to 3.0% from 2.5%.

A hike of that size will limit Citigroup’s share buybacks, versus its peers, a report from analyst Vivek Juneja of JPMorgan shows. Juneja expects Citigroup will have the lowest capital return of big banks he covers.

Citigroup CEO Jane Fraser said the bank will continue its “planned capital actions, including common dividends of at least $0.51 per share” and buying back shares in the market.

In India

The Reserve Bank of India has curbed banks’ dividend-paying ability in the financial year 2020-21 citing an ongoing second wave of coronavirus that comes with an economic cost.

“In view of the continuing uncertainty caused by the ongoing second wave of Covid-19 in the country, it is crucial that banks remain resilient and proactively raise and conserve capital as a bulwark against unexpected losses, the Reserve Bank of India said in April.

“Banks may pay dividend on equity shares from the profits for the financial year ended March 31, 2021, subject to the quantum of dividend being not more than fifty percent of the amount determined as per the dividend payout ratio prescribed,” it said.

Private lender HDFC Bank has announced that the board has declared a dividend of Rs 6.50 per share for the year ended 31 March 2021.



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