Fed allows big US banks to resume paying dividends

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WASHINGTON, Ma 19 (AFP): The Federal Reserve said Friday it would allow some of the largest US banks to resume paying or boost dividends, in a new sign of the sector's emergence from the 2008-2009 housing finance collapse. Several top banks immediately announced they were resuming or upping shareholder payouts, with JPMorgan Chase quintupling its quarterly dividend to 25 cents a share, or 2.20 per cent Thursday's closing price. JPMorgan Chase also said it would launch a $15 billion share buyback program, also reallowed in the central bank's Friday announcement on the outcome of stress tests for the big banks. The Fed told banks in 2009 to cut or halt dividend payments and raise more capital after the collapse of a US housing sector bubble set off a chain reaction that devastated bank assets. Nearly 350 large and small banks were forced to shut down since 2008, and the government intervened with hundreds of billions of dollars to protect the largest institutions. Friday the Fed said stress tests and reviews of bank capital planning showed that some, though not all, of the top 19 banking firms were strong enough to begin sending returns to shareholders. It said that a $300 billion increase in shareholder funds in the 19 banks had underpinned a "significant improvement in both economic conditions and the capital positions of financial institutions."