CitiGroup Inc. is actually going to ask the regulators for permission of buying back a few numbers of shares, according to latest reports. The number of shares that they will ask to buy back is minimal, according to insiders. CitiGroup is not planning to ask the regulators for increasing quarterly dividend of the company though, according to insider sources. The current quarterly dividend of the company is a penny for each share.
The Chairman of CitiGroup Michael O’Neill and the newly appointed Chief Executive Officer Michael Corbat told the executives of the company to create a kind of conservative capital plan which will be submitted to the Federal Reserve. A conservative capital plan decreases the chances of the Federal Reserve rejecting it. Incidentally, the big banks will need to submit the capital plans by end of 7th January, 2013.
Incidentally, the last annual plan of Citigroup was rejected by the Federal Reserve in March, 2012 as the former Chief Executive Officer of CitiGroup, Vikram Pandit made the investors and analysts believe that the company would be given the permission to spend a few billion Dollars on special dividends and share buybacks. The rejection was definitely a big shock for the bank in 2012.
Another report from an insider source suggested that the prominent US based bank, JPMorgan Chase & Co is cautiously optimistic about getting the required approval, so that they can buy back some more stocks and also raise the company dividends.
In November, last year, JPMorgan received the approval from the Federal Reserve so that they can restart the process of previously approved buybacks. The bank had to suspend the buyback process in August, 2012 after it experienced a loss worth multi-billion Dollars on derivative transactions in the London office of the same. However, thanks to its profitable operations, the bank has been able to generate good enough capital which has covered all of those losses.
According to reports, Morgan Stanley is also focusing on its capital plan to be presented to the Federal Reserve. Morgan Stanley and Citigroup are currently running a joint venture in the wealth management business and as part of the deal; Morgan Stanley will be buying a minority stake of that of CitiGroup. When the official spokesperson of Morgan Stanley was asked on this matter, he declined to give statement on this matter.