Bank Basel Stall Tactic Could Backfire on GOP: Street Whispers
Written by: Philip van Doorn
Tickers in this article: JPM C BAC WFC
The banks -- and even the regulators -- have already shown plenty of confidence that the largest financial players will comfortably meet the fully Basel III requirements as they are phased in through the end of 2018.
- The Federal Reserve in March approved a plan by JPMorgan Chase (JPM) to increase its quarterly dividend by a nickel a share to 30 cents, along with $12 billion in common share repurchases s during 2012, followed by another $3 billion in buybacks during the first quarter of 2013. While JPMorgan CEO James Dimon suspended the buyback in May program after disclosing the company's hedge trading losses, when the company on July 13 reported a second-quarter profit of $5 billion -- even after $4.4 billion in trading losses -- Dimon said "hopefully, if all goes well, we can start buying back stock early in the fourth quarter." JPMorgan estimated that under the capital rules proposed in June, the company's Basel III Tier 1 common equity ratio was 7.9% as of June 30, and would rise to 9.1% "after impact of mitigants and runoff through 2014." JPMorgan Chase's fully phased-in Tier 1 common equity ratio requirement will be 7.0%, plus an additional buffer of up to 2.5%, at the end of 2018.
- Bank of America (BAC) estimated that as of June 30 its Tier 1 common equity ratio was 8.1%, "on a fully phased-in basis." The company did not request Federal Reserve approval for any increased capital return to investors during 2012 through a dividend increase or share buybacks. CFO Bruce Thompson said during the company's earnings conference call on July 18 that the company had "estimated we would be in excess of 7.5% under Basel III at the end of the year; so based on where we came at out at the end of the quarter we are quite pleased with the progress we have made so far." CEO Brian Moynihan said that "we continue to make strong progress and feel good about where we stand, especially in light of our Basel III guidance.