By Emily Stephenson and Peter Rudegeair
WASHINGTON/NEW YORK Aug 23 The U.S. Federal
Reserve approved a revised capital plan for BB&T Corp
for 2013, and the bank said on Friday that it is maintaining its
current quarterly dividend.
With the approval, the only major U.S. bank whose plan has
not yet been approved is auto lender Ally Financial, which
earlier this week announced plans to sell shares to bolster its
The Fed vetoed BB&T's plan in March, and the bank submitted
a new proposal in June. It was unclear how the original and
resubmitted plans differed because the bank is not permitted to
provide details on the rejected plan.
BB&T was conservative in crafting its revised capital plan
because of uncertainty over future capital requirements, BB&T
Chief Executive Kelly King said at a conference in June. But the
bank did raise its quarterly dividend 15 percent in January to
its current level of 23 cents a share.
The biggest banks must submit any plans they have to buy
back shares or pay dividends to the Fed, according to the 2010
Dodd-Frank financial reform law.
The rules came about because regulators noticed during the
financial crisis that many banks were raising billions of
dollars of capital just months after having bought back shares
or paid dividends. Bank executives generally view cutting
dividends as a signal of financial weakness, and are often
reluctant to take the step even when it is prudent.
The Fed can prevent a bank from buying back shares or paying
dividends to make the bank safer, or if it takes issue with the
bank's capital planning process.
In addition to rejecting BB&T and Ally's plans in March,
regulators warned Goldman Sachs Group Inc and JPMorgan
Chase & Co to fix flaws in the way they determine
The Fed said in March it rejected the BB&T plan based on
unspecified "qualitative" concerns. The bank said it believed
the decision was not related to BB&T's "capital strength,
earnings power or financial condition."
BB&T disclosed in its 2012 annual report that the bank had
to revise its calculations for risk-weighted assets and
risk-based capital ratios.
That miscalculation "may have prompted the regulators to
examine BB&T's internal systems and processes more closely,"
CreditSights analysts said in an August 21 report.
A BB&T spokesman declined to elaborate on the Fed's
Shares of BB&T fell 16 cents to $35.75 in late trading. The
bank's shares have risen nearly 21 percent since the start of
BB&T announced its strongest quarterly earnings ever on July
18. Net income available to common shareholders increased 7.3
percent to $547 million in the second quarter from a year prior,
reflecting "record performances from our insurance, investment
banking and brokerage, and trust and investment advisory
businesses," King said in a statement.
The next round of Fed-administered stress tests begins this
fall. King said BB&T would re-evaluate its capital position
before it submitted a new plan to regulators in January 2014.