KW:Nothing has changed, the derivatives exposure simply massive and a bullet dodged as financial manipulators have ramped markets back to pre-Brexit levels and banks themselves have unleashed a share buy back frenzy to lift their stock prices higher. Still, Deutsche Bank and Santander failed the latest FED stress test with Morgan Stanley requiring some ‘jiggery pockery’ to get itself into an acceptable state.
Morgan Stanley, however, did not do quite as well, and the while the Fed did not object to the capital plan of Morgan Stanley, it “is requiring the firm to submit a new capital plan by the end of the fourth quarter of 2016 to address certain weaknesses in its capital planning processes.” Finally, “the Fed objected to the capital plans of Deutsche Bank Trust Corporation and Santander Holdings USA, Inc. based on qualitative concerns. The Federal Reserve did not object to any capital plans based on quantitative grounds.” Ironically, just moments after the Fed announced that Morgan Stanley may have deficiencies, it announced that it is boosting its dividend to $0.20/share and will repurchase up to $3.5 billion in stock, adding that it sees itself “fully meeting requirements within the timeline.”
MS stock dipped at first, then ripped right back into the green.
And with the Fed out of the way, all other banks have unleashed a veritable feeding frenzy of dividend hikes and buybacks.
- Bank of America Authorizes $5b Buyback; Boosts Div to 7.5c-Share
- Citigroup Plans $8.6b Buyback; Lifts Qtr Div to 16c From 5c
- JPMorgan Chase Plans $10.6b Buyback, Maintains qtr Div at 48c/shr
- Goldman Sachs plans buybacks of stock, boosts quarterly dividend
- American Express Plans $3.3b Buyback, Div. Boost to 32c-Share
- Huntington Bancshares to Boost Qtr Div. to 8c From 7c/Shr
- SunTrust to Lift Dividend 8% Starting 3Q, Sets $960m Repurchase
- U.S. Bancorp to Buy Back $2.6b of Shares, Boosts Div. by 9.8%
- Zions Bancorp Plans to Boost Dividend, Buyback
- Ally Financial announces inaugural dividend of 8c/share, buyback of up to $700m of stock
- Comerica Plans $440m Buyback, Sets div. increase to 23c vs 22c
- M&T Bank Plans Max. $1.15b Buyback; Dividend Raised By Up to 5c
- PNC Plans Share Buybacks Up to $2b, Raise Qtr Div. to 55c/shr
- BNY Mellon Plans $2.7b Buyback, Boosts Dividend
- Northern Trust to Buy Back $275m; Boosts Dividend to 38c Vs 36c
- State Street to Buy Up to $1.4b; Boosts Dividend to 38c Vs 34c
- Bank of New York plans to buy back $2.14b in shares, boost dividend by 12%
- Citizens Finl Group Plans Quarterly Div. 12c/Share, Est. 12c
- BNY Mellon Plans $2.7b Buyback, Boosts Dividend by ~12% to 19c from 17c
- Banco Bilbao Vizcaya Plan Includes Common Dividends of $120m
- KeyCorp Plans to Evaluate Qtr Div. Boost to 9.5c/Shr, Est. 8.5c
- Discover Financial to Buy Back Up to $1.95b of Stock, Boost Div. to 30s/shr from 28c.
We expect many more to boost their dividend and buyback plans before the night is over. And since all of these transactions will be debt-funded, and since other banks will pocket the commission, expect a feeding frenzy of cross bank revenue thanks to yield starved investors who have no choice but to give banks their money all as a result of the Fed’s policies which today pushed the 30Y just shy of record low yields.
“Deutsche Bank appears to be the most important net contributor to systemic risks, followed by HSBC and Credit Suisse. The relative importance of Deutsche Bank underscores the importance of risk management, intense supervision of G-SIBs and the close monitoring of their cross-border exposures, as well as rapidly completing capacity to implement the new resolution regime.”