By Andrew Ackerman 

WASHINGTON -- The biggest U.S. banks will face restrictions on dividends and share buybacks for another three months, the Federal Reserve said Wednesday, citing the need to conserve capital during the coronavirus-induced downturn.

The Fed said it would maintain prohibitions on share buybacks and a cap on dividend payments by banks with more than $100 billion in assets until the end of year. The restrictions, imposed for the third quarter, were due to expire Wednesday.

The action is intended to "ensure that large banks maintain a high level of capital resilience," the central bank said in a statement. "The capital positions of large banks have remained strong during the third quarter while such restrictions were in place."

In another sign of the uncertainty facing the industry and the broader economy, the Fed has required big banks to undergo a second round of so-called stress tests later this year, based on two coronavirus-related recession scenarios. Results of the tests, designed to ensure banks can continue to lend in a crisis, will be announced by the end of the year.

Write to Andrew Ackerman at andrew.ackerman@wsj.com

(END) Dow Jones Newswires

September 30, 2020 16:32 ET (20:32 GMT)