JPMORGAN CHASE Company became the first bank to say regulators have completed stress tests of its balance sheet and approved a dividend increase and stock buyback. The bank said it will raise its quarterly dividend by a nickel to 30 cents and buy back as much as $12 billion of stock this year.
The announcement came two days before the Federal Reserve was originally scheduled to announce results of stress tests for 19 US bank holding companies.
JPMorgan shares surged on the news and closed up more than 7 per cent at $43.39. The bank said that the Federal Reserve has informed the company that it did not object to its plans to distribute capital. “We are pleased to be in a position to increase our dividend and to establish a new equity repurchase programme,” said chief executive Jamie Dimon.
Mr Dimon has said in the past that many banks will have more capital than they need as customers pay back loans and losses from the fiscal crisis subside. While his view would seem to contradict requirements that banks meet higher capital thresholds by 2019, the approval of JPMorgan’s distributions indicates regulators decided the bank has enough capital to make the payouts and meet the new thresholds.
Meanwhile, Zurich Financial said it would propose outgoing Deutsche Bank chief executive Josef Ackermann as its chairman after a shareholder meeting on March 29th. The 63-year-old Swiss-born Ackermann will hand the reins of Deutsche, Germany’s flagship bank, to investment banker Anshu Jain and Germany chief Juergen Fitschen during the annual shareholders meeting at the end of May. Until then, Tom de Swaan, whom the Swiss insurer proposes as vice-board chairman, will act as chairman.
The Zurich job is a far lower-key role than Ackermann has carved out in his decade at the helm of Deutsche, during which he transformed the German lender into a global investment bank with retail banking, asset management and wealth management operations.
Deutsche Bank has been in talks with financial institutions including Zurich Financial over executive liability insurance to cover its managers in a long drawn-out dispute with the estate of deceased German media mogul Leo Kirch. – (Reuters)
