The US Federal Reserve said on Thursday it will cap big bank dividend payments and bar share repurchases until at least the fourth quarter after finding lenders faced significant capital losses when tested against an economic slump caused by the coronavirus pandemic.
In its analysis, the Fed found that the country's largest lenders have struggled to model the unprecedented downturn and ensuing rescue programmes, adding to already unprecedented uncertainty about how banks and the economy overall would perform in the coming months.
The Fed did not say how each bank fared under the pandemic analysis, but found the 34 tested firms could suffer as much as $700 billion (Dh2.57 trillion) in aggregate loan losses under the most severe, "W-shaped" economic recovery.
Shares of banks including JP Morgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs tumbled in after-hours trading on the news, having risen earlier in the day.
The Fed determined that although banks could weather a severe, tumultuous and prolonged economic downturn, several would cut close to their minimum capital requirements.
With that in mind, the regulator placed a new limit on how much capital banks could pay to investors in dividends in the third quarter. They cannot pay more than they did in the second quarter, and payments cannot exceed average net income over the last four quarters.
The Fed also said it was barring share repurchases for at least the third quarter. The biggest banks had voluntarily suspended buy-backs as the pandemic took hold, but it was not clear how long that would last.
The Fed's actions were unprecedented. It was the first time since the central bank implemented stress tests during the 2007-2009 financial crisis that it had to fundamentally alter its annual exam for a dramatic economic swing.
After releasing some details in February, the Fed had to add last-minute "sensitivity analyses" in May to account for actual economic turmoil that exceeded the worst-case officials envisioned in the original test.
The Fed's analysis suggested that some banks are more vulnerable than others. In aggregate, banks saw capital levels fall to 7.7 per cent under the toughest scenario, but some came dangerously close to the 4.5 per cent minimum they are required to hold to be considered well-capitalised.
Without naming any particular bank, the Fed said some relied on "more optimistic than appropriate" outlooks and that their capital planning "has not been thoughtful".
The biggest banks either declined to comment or did not immediately respond to Reuters.
The Financial Services Forum, an industry trade group, said the results underscored the industry's strength. The group also highlighted steps banks have taken to support the economy and urged the Fed to be transparent in its process.
Banks privately received their specific results from the Fed on Thursday. They can adjust original plans to get a better assessment, and release those details after the market closes on Monday.
Analysts and investors suggested the Fed's capital limitations – though surprising – were not necessarily a bad thing. Although banks had voluntarily suspended buy-backs, they were more reticent to limit dividends, and the Fed's restrictions are forcing them to be cautious.
"It is worth being punished a little bit to ensure the long-term viability of your investments," said Bill Smead, chief investment officer of Smead Capital Management, whose fund owns JP Morgan, Bank of America and Wells Fargo.
The bio
Favourite book: Kane and Abel by Jeffrey Archer
Favourite quote: “The world makes way for the man who knows where he is going.” - Ralph Waldo Emerson, American essayist
Favourite Authors: Arab poet Abu At-Tayyib Al-Mutanabbi
Favourite Emirati food: Luqaimat, a deep-fried dough soaked in date syrup
Hobbies: Reading and drawing
Crime%20Wave
%3Cp%3EHeavyweight%20boxer%20Fury%20revealed%20on%20Sunday%20his%20cousin%20had%20been%20%E2%80%9Cstabbed%20in%20the%20neck%E2%80%9D%20and%20called%20on%20the%20courts%20to%20address%20the%20wave%20of%20more%20sentencing%20of%20offenders.%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3ERico%20Burton%2C%2031%2C%20was%20found%20with%20stab%20wounds%20at%20around%203am%20on%20Sunday%20in%20Goose%20Green%2C%20Altrincham%20and%20subsequently%20died%20of%20his%20injuries.%3C%2Fp%3E%0A%3Cp%3E%26nbsp%3B%E2%80%9CMy%20cousin%20was%20murdered%20last%20night%2C%20stabbed%20in%20the%20neck%20this%20is%20becoming%20ridiculous%20%E2%80%A6%20idiots%20carry%20knives.%20This%20needs%20to%20stop%2C%E2%80%9D%0D%20Fury%20said.%20%E2%80%9CAsap%2C%20UK%20government%20needs%20to%20bring%20higher%20sentencing%20for%20knife%20crime%2C%20it%E2%80%99s%20a%20pandemic%20%26amp%3B%20you%20don%E2%80%99t%20know%20how%20bad%20it%20is%20until%20%5Bit%E2%80%99s%5D%201%20of%20your%20own!%3C%2Fp%3E%0A
MATCH INFO
Inter Milan 1 (Martinez 18' pen)
Juventus 2 (Dybala 4', Higuain 80')
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
The Melbourne Mercer Global Pension Index
The Melbourne Mercer Global Pension Index
Mazen Abukhater, principal and actuary at global consultancy Mercer, Middle East, says the company’s Melbourne Mercer Global Pension Index - which benchmarks 34 pension schemes across the globe to assess their adequacy, sustainability and integrity - included Saudi Arabia for the first time this year to offer a glimpse into the region.
The index highlighted fundamental issues for all 34 countries, such as a rapid ageing population and a low growth / low interest environment putting pressure on expected returns. It also highlighted the increasing popularity around the world of defined contribution schemes.
“Average life expectancy has been increasing by about three years every 10 years. Someone born in 1947 is expected to live until 85 whereas someone born in 2007 is expected to live to 103,” Mr Abukhater told the Mena Pensions Conference.
“Are our systems equipped to handle these kind of life expectancies in the future? If so many people retire at 60, they are going to be in retirement for 43 years – so we need to adapt our retirement age to our changing life expectancy.”
Saudi Arabia came in the middle of Mercer’s ranking with a score of 58.9. The report said the country's index could be raised by improving the minimum level of support for the poorest aged individuals and increasing the labour force participation rate at older ages as life expectancies rise.
Mr Abukhater said the challenges of an ageing population, increased life expectancy and some individuals relying solely on their government for financial support in their retirement years will put the system under strain.
“To relieve that pressure, governments need to consider whether it is time to switch to a defined contribution scheme so that individuals can supplement their own future with the help of government support,” he said.
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
UAE currency: the story behind the money in your pockets
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
About Karol Nawrocki
• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.
• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.
• Cultivates tough-guy image, posting videos of himself at shooting ranges and in boxing rings.
• Met Donald Trump at the White House and received his backing.
COMPANY%20PROFILE
%3Cp%3ECompany%20name%3A%20CarbonSifr%3Cbr%3EStarted%3A%202022%3Cbr%3EBased%3A%20Dubai%3Cbr%3EFounders%3A%20Onur%20Elgun%2C%20Mustafa%20Bosca%20and%20Muhammed%20Yildirim%3Cbr%3ESector%3A%20Climate%20tech%3Cbr%3EInvestment%20stage%3A%20%241%20million%20raised%20in%20seed%20funding%3Cbr%3E%3C%2Fp%3E%0A
The Details
Kabir Singh
Produced by: Cinestaan Studios, T-Series
Directed by: Sandeep Reddy Vanga
Starring: Shahid Kapoor, Kiara Advani, Suresh Oberoi, Soham Majumdar, Arjun Pahwa
Rating: 2.5/5
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
BMW%20M4%20Competition
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E3.0%20twin-turbo%20inline%20six-cylinder%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%3C%2Fstrong%3E%20eight-speed%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E503hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20600Nm%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20from%20Dh617%2C600%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%0D%3C%2Fp%3E%0A
Story%20behind%20the%20UAE%20flag
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Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
The Birkin bag is made by Hermès.
It is named after actress and singer Jane Birkin
Noone from Hermès will go on record to say how much a new Birkin costs, how long one would have to wait to get one, and how many bags are actually made each year.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
Killing of Qassem Suleimani
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Tips from the expert
Dobromir Radichkov, chief data officer at dubizzle and Bayut, offers a few tips for UAE residents looking to earn some cash from pre-loved items.
- Sellers should focus on providing high-quality used goods at attractive prices to buyers.
- It’s important to use clear and appealing photos, with catchy titles and detailed descriptions to capture the attention of prospective buyers.
- Try to advertise a realistic price to attract buyers looking for good deals, especially in the current environment where consumers are significantly more price-sensitive.
- Be creative and look around your home for valuable items that you no longer need but might be useful to others.
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Killing of Qassem Suleimani
Results
2pm Handicap (PA) Dh85,000 1,800m
Winner AF Al Baher, Tadhg O’Shea (jockey), Ernst Oertel (trainer).
2.30pm Maiden (TB) Dh75,000 1,400m
Winner Alla Mahlak, Fabrice Veron, Rashed Bouresly.
3pm Handicap (TB) Dh80,000 1,400m
Winner Davy Lamp, Adrie de Vries, Rashed Bouresly.
3.30pm Handicap (TB) Dh105,000 1,400m
Winner Ode To Autumn, Richard Mullen, Satish Seemar.
4pm Handicap (TB) Dh80,000 1,950m
Winner Arch Gold, Pat Dobbs, Doug Watson.
4.30pm Maiden (TB) Dh75,000 1,800m
Winner Meqdam, Pat Dobbs, Doug Watson.
5pm Handicap (TB) Dh90,000 1,800m
Winner Native Appeal, Sam Hitchcott, Doug Watson.
5.30pm Maiden (TB) Dh75,000 1,400m
Winner Amani Pico, Tadhg O’Shea, Satish Seemar
The%20specs%3A%202024%20Mercedes%20E200
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.0-litre%20four-cyl%20turbo%20%2B%20mild%20hybrid%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E204hp%20at%205%2C800rpm%20%2B23hp%20hybrid%20boost%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E320Nm%20at%201%2C800rpm%20%2B205Nm%20hybrid%20boost%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E9-speed%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E7.3L%2F100km%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENovember%2FDecember%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh205%2C000%20(estimate)%3C%2Fp%3E%0A
RoboCop%3A%20Rogue%20City
%3Cp%3E%3Cstrong%3EDeveloper%3A%20%3C%2Fstrong%3ETeyon%3Cbr%3E%3Cstrong%3EPublisher%3A%20%3C%2Fstrong%3ENacon%3Cbr%3E%3Cstrong%3EConsole%3A%3C%2Fstrong%3E%20PlayStation%205%2C%20Xbox%20Series%20X%2FS%20and%20PC%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3%2F5%3C%2Fp%3E%0A
Get Out
Director: Jordan Peele
Stars: Daniel Kaluuya, Allison Williams, Catherine Keener, Bradley Whitford
Four stars
ILT20%20UAE%20stars
%3Cp%3E%3Cstrong%3ELEADING%20RUN%20SCORERS%3C%2Fstrong%3E%3Cbr%3E1%20Nicholas%20Pooran%2C%20261%3Cbr%3E%3Cstrong%3E2%20Muhammad%20Waseem%20(UAE)%2C%20248%3C%2Fstrong%3E%3Cbr%3E3%20Chris%20Lynn%2C%20244%3Cbr%3E4%20Johnson%20Charles%2C%20232%3Cbr%3E5%20Kusal%20Perera%2C%20230%3Cbr%3E%3Cbr%3E%3Cstrong%3EBEST%20BOWLING%20AVERAGE%3C%2Fstrong%3E%3Cbr%3E(minimum%2010%20overs%20bowled)%3Cbr%3E%3Cstrong%3E1%20Zuhaib%20Zubair%20(UAE)%2C%209%20wickets%20at%2012.44%3Cbr%3E2%20Mohammed%20Rohid%20(UAE)%2C%207%20at%2013.00%3C%2Fstrong%3E%3Cbr%3E3%20Fazalhaq%20Farooqi%2C%2017%20at%2013.05%3Cbr%3E4%20Waqar%20Salamkheil%2C%2010%20at%2014.08%3Cbr%3E%3Cstrong%3E5%20Aayan%20Khan%20(UAE)%2C%204%20at%2015.50%3C%2Fstrong%3E%3Cbr%3E6%20Wanindu%20Hasaranga%2C%2012%20at%2016.25%3Cbr%3E%3Cstrong%3E7%20Mohammed%20Jawadullah%20(UAE)%2C%2010%20at%2017.00%3C%2Fstrong%3E%3C%2Fp%3E%0A
