TribLIVE

| Business

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Fed rejects RBS Citizens' dividend, buyback plans; PNC, BNY Mellon pass test

Email Newsletters

Click here to sign up for one of our email newsletters.

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

Thursday, March 27, 2014, 12:01 a.m.
 

RBS Citizens was among five banks whose plans to buy back stock and pay dividends to shareholders were rejected by the Federal Reserve because of regulators' concerns that they aren't adequately prepared to deal with another financial disaster.

Pittsburgh-based PNC Financial Services Group and Bank of New York Mellon were among 25 institutions whose capital plans passed muster in the latest phase of the Fed's stress tests. Both said they intend to increase their quarterly dividends and buy back stock.

Boston-based RBS Citizens, the third-largest bank in the Pittsburgh area by deposits, had passed the first phase of the stress tests last week. Those tests didn't factor in stock buybacks and dividend payment plans.

RBS Citizens failed the latest phase because of “qualitative concerns” that it needed a better plan in case of a severe recession, the Fed said on Wednesday.

Seeking to avoid another financial calamity like that in 2008, regulators have run annual tests on how the 30 largest banks would fare in a similar recession.

Cincinnati-based Fifth Third Bancorp., with 15 offices in the Pittsburgh area, and Huntington Bancshares, based in Columbus and with 50 offices here, also passed the stress test.

During the next year, PNC said it plans to repurchase up to $1.5 billion shares of its common stock. BNY Mellon said it is planning a $1.74 billion buyback.

The boards of directors at PNC and BNY Mellon are expected to consider the common stock dividend at their annual meetings next month.

A PNC spokesman had no additional comment, and spokespersons for RBS Citizens could not be reached late Wednesday. BNY Mellon CEO Gerald Hassell said the Fed's decision reflected the bank's strong business model.

“The Federal Reserve's notice not to object to our 2014 capital plan is consistent with the strength of our business model in stress scenarios, which continues to provide us with the financial flexibility to deploy our capital in the form of dividends and share repurchases,” he said in a statement.

Others that failed because of qualitative concerns included Citigroup Inc., HSBC North America Holdings Inc. and Santander Holdings USA. The Federal Reserve objected to the capital plan of Zions Bancorporation because its capital fell below the minimum required.

This was the second round of stress tests in as many weeks. The Salt Lake City-based Zions was the only bank to fail the first round when the Fed measured each bank's capital levels.

Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or cfleisher@tribweb.com.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Business Headlines

  1. Cost-cutting at Kraft Heinz extends to refrigerator
  2. Kennametal expects to consolidate plants as it shrinks manufacturing in continuing streamlining; profit drops
  3. Muni bond funds stressed
  4. GNC to convert more stores to franchises as sales, profits slip
  5. Range Resources cuts workforce 11%
  6. Economy’s 2Q best since last year
  7. Home rental prices jumped again in June
  8. PPG puts brand 1st in strategy to reach commercial paint market
  9. Consol Energy, Range Resources report 2Q losses, plan deeper cuts
  10. U.S. asks Supreme Court to reinstate convictions of portfolio managers who won on appeal
  11. Post-Gazette offers voluntary buyouts in bid to avoid layoffs