Fed Preparing Guidelines For Bank Dividend Increases

The Federal Reserve is preparing guidelines for supervisors to use in assessing whether banks are strong enough to boost dividends or buy back shares, a person familiar with the matter said. The Fed plans to release the guidelines as soon as this month, said the person, who declined to be identified because the plan hasn’t been made public.

“It’s significant because it will give a level of guidance and understanding that the Federal Reserve did not use before,” said Thomas Sowanick, chief investment officer and co-president of Omnivest Group LLC in Princeton, New Jersey, which has $1 billion under advisory. “It really demonstrates the enhanced oversight that the Fed has.” “It signals that the Fed is comfortable with the capitalization the industry has or will have in the future,” said James Chessen, chief economist for the American Bankers Association in Washington. “It’s a very good sign.”

Source: Bloomberg

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