Summary
The Bank of New York Mellon Corporation (BK) announced a significant update regarding its capital return strategy following notification from the Federal Reserve. The Federal Reserve has indicated that BK's Stress Capital Buffer (SCB) requirement will remain at the regulatory minimum of 2.5% effective October 1, 2021. Concurrently, the Federal Reserve's temporary restrictions on capital distributions for large banks will conclude after June 30, 2021, providing BK with greater flexibility. In response to this enhanced flexibility and its stable capital position, BK plans to substantially increase its shareholder returns. The company intends to raise its quarterly common stock dividend from $0.31 to $0.34 per share, commencing as early as Q3 2021, subject to Board approval. Furthermore, the Board has approved a new share repurchase program authorizing up to $6.0 billion in common stock buybacks, to be executed throughout Q3 2021 and Q4 2022. This new repurchase authorization supersedes all prior plans.
Key Highlights
- 1Federal Reserve confirms BK's Stress Capital Buffer (SCB) requirement remains at the regulatory minimum of 2.5% from October 1, 2021.
- 2Federal Reserve's restrictions on capital distributions for large banks will end after June 30, 2021.
- 3BK intends to increase its quarterly common stock dividend from $0.31 to $0.34 per share, starting as early as Q3 2021.
- 4Board of Directors approved a new share repurchase program of up to $6.0 billion.
- 5Share repurchases are authorized to begin in Q3 2021 and continue through Q4 2022.
- 6This new repurchase program replaces all previous authorization plans.
- 7Company anticipates its final SCB will be confirmed by the Federal Reserve later in 2021.