James Gorman, Chairman and Chief Executive Officer of Morgan Stanley, speaks during an interview with Bloomberg Television in Beijing, China May 30, 2019.
Giulia Marchi | Bloomberg |bergGetty Images
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Morgan Stanley, the superpower of Wall Street Double the quarterly dividend and announced a new $12 billion share repurchase plan.
The bank said Monday in a press release that its dividend would increase to 70 cents per share beginning in the third quarter and would buy its own shares up to $12 billion through June 2022. Morgan Stanley shares jumped 4 percent. %
“Morgan Stanley has accumulated a significant amount of surplus capital over the years. And now it has one of the largest reserves in the industry,” CEO James Gorman said in a press release. “The Board’s action reflects our decision to reset our capital base in line with the demand we have for our changing business model.”
Morgan Stanley’s new funding plan appears to be one of the most aggressive plans the bank has rushed to reveal when the market closes.
Major competitor JPMorgan Chase bank has raised its dividend 11 percent to $1 per share. JPMorgan said it was “still authorized” to tap its existing share repurchase plan.
Bank of America says its dividend will rise 17% to 21 cents in April. The bank has announced a $25 billion share repurchase plan.
Goldman Sachs said it plans to increase its dividend by 60% to $2 per share, subject to bank board approval.
Last week, the Federal Reserve announced that all 23 banks undergoing 2021 stress tests have passed, with industry “superior” requiring capital levels during a hypothetical economic downturn. While institutions will lose $474 billion in this scenario. Loss cushioning capital will remain more than twice the required minimum.
This test is a big step forward for American banks. It comes the year after a global pandemic threatened the industry to pass a real-life stress test. After playing a key role in the 2008 financial crisis, banks were forced to perform annual rituals. and requires permission from regulators to increase dividends and buy back shares.
Banks will now restore flexibility in how they choose to allocate funds in the form of dividends and buybacks. As long as they maintain capital levels above what is known as a stress capital buffer. Banks can make their own decisions. The new regime was supposed to start last year. But the pandemic intervened.
While analysts say most bank investors are mindful of higher payouts from banks. But the larger-than-expected funding plan may still be favorable.
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