Some of the world’s largest financial institutions have suspended share buyback programs as they grapple with the fallout of the market rout.
The eight members of the Financial Services Forum – Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo – have collectively decided to suspend share buyback programs due to the “unprecedented challenge” of the COVID-19 pandemic.
“The decision on buybacks is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services,” the FSC said in a statement.
“The decision is consistent with actions by the Federal Reserve, the administration, and the Congress.”
The buybacks will be suspended for the remaining part of Q1 and the rest of Q2 2020. Each member institution retains the ability to reinstate its program “as soon as circumstances warrant”.
“Members of the Financial Services Forum, who are subject to the Large Institution Supervision Coordinating Committee supervisory program, remain strong and well capitalised,” the FSC said in its statement.
“They collectively have increased their capital, which acts as a buffer in times of stress, by more than 40 percent in the past 10 years to $914 billion. The members of the forum have repeatedly passed the Federal Reserve’s annual stress tests, showing they are able to continue to lend and support the economy even during a severe economic downturn.”