Good news for Citigroup — and its shareholders. It passed the Federal Reserve’s latest stress test. But Bank of America got the equivalent of an incomplete.
The Fed said on Wednesday that it was not objecting to the capital plans of 28 of the 31 big banks that must take part in its annual stress tests.
Several of those 28 banks — including Goldman Sachs, Morgan Stanley, U.S. Bancorp (USB), PNC (PNC), Wells Fargo and American Express (AXP) — quickly announced plans to boost their dividends and/or buy back more stock, moves that shareholders love.
“This is a sign that the banks are really getting their ducks in a row,” said Justin Ziegler, investment manager at Aberdeen Asset Management.
The two banks that failed were U.S. subsidiaries of two big European banks: the trust operations of Deutsche Bank (DB) and Santander (SAN). That was widely expected. But both stocks fell about 1% in after hours trading. BofA didn’t outright fail, but it will have to re-submit its plans to the Fed.