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Shareholders are looking at a $109 billion payout if big banks pass the stress test

Stephanie Yang   

Shareholders are looking at a $109 billion payout if big banks pass the stress test
Finance2 min read

The second round stress test results will be released Wednesday, which means shareholders are about to find out who is getting a payout, and who isn't.

According to Bloomberg, banks that pass the Federal Reserve's annual test will be able to increase quarterly dividends by an average of 53 percent. This would result in a total distribution of $109 billion over 15 months, the article said.

Last year Citigroup was the only major bank to fail the stress test, which meant it was unable to pay dividends or buyback stock. If Citi passes this year, it would mean a 60-fold increase in distributions, according to Bloomberg data.

Other Wall Street banks looking at big payouts include Wells Fargo and JPMorgan.

All 31 banks passed the first part of the test, which meant all had sufficient capital to absorb shocks and losses in event of a crisis. The second round is a measure of the Fed's approval on a bank's internal crisis management.

Despite getting through the first round, several banks are facing analyst concerns over whether or not they will pass, including Citi, Goldman Sachs, and Bank of America.

The Fed will release stress test results at 4:30 pm ET.

Read more at Bloomberg >>

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