State Street's Capital Plan Approved - Analyst Blog
March 15 2013 - 9:40AM
Zacks
State Street Corporation (STT) has received the
Federal Reserve’s approval for its capital plans after the
clearance of the Stress Test. Upon receiving the approval, the
board of directors has announced a buyback plan authorizing
purchase of up to $2.1 billion worth of stock through Mar 13,
2014.
The new buyback plan represents roughly 17% hike from the prior
year’s program, which authorized the repurchase of $1.8 billion
share from Apr 2012 through Feb 2013. State Street may begin to
repurchase the shares through various transactions including
open-market purchases, off-the-market transactions and under Rule
10b5-1of the trading programs.
The capital plan reinforces the company’s priority to enhance
shareholders’ value. Earlier in Feb 2013, State Street had declared
an 8.3% hike in its quarterly dividend to 26 cents per share,
payable on Apr 21, 2013 to stockholders of record as of Apr 1,
2013.
This new stock buyback plan authorization follows the 2013
Comprehensive Capital Analysis and Review (CCAR) process, under
which the Federal Reserve appraised State Street’s 2013 capital
plan and did not raise any objections to the proposed capital
actions.
State Street, along with many other financial institutions, had
submitted its capital plan to the Federal Reserve for Stress Tests
to secure approval for dividend increases and share buybacks.
Stress Test was conducted to find out whether the banks have enough
capital to survive another financial crisis. 17 out of 18 companies
passed the test, where Ally Financial Inc. was the one to fall
short.
Moreover, the Fed approved capital plans of 14 companies including
State Street. However, capital plans of Ally Financial and
BB&T Corporation (BBT) were not approved and
JPMorgan Chase & Co. (JPM) and The
Goldman Sachs Group, Inc. (GS) were asked to re-submit
their plans after making certain amendments.
State Street’s continuous efforts at enhancing shareholder value
are highly commendable. This reflects the company’s strong
fundamentals and robust liquidity.
State Street currently retains a Zacks Rank #2 (Buy).
BB&T CORP (BBT): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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