NEW YORK, March 7 Citigroup Inc said on Thursday it has asked the Federal Reserve for permission to spend $1.2 billion to buy back its own stock through next March, but had not asked to raise its quarterly dividend.
The company announced the moves after the Federal Reserve released results of its stress test of bank capital, which showed Citigroup scoring better than a year ago.
Analysts, on average, had expected Citigroup to raise its quarterly dividend after the stress test to 10 cents a share from the current 1 cent, according to Thomson Reuters I/B/E/S.
Many had also expected the company to ask to spend a nominal amount on buybacks after being turned down last year in a bid to return capital.
Analyst Anthony Polini of brokerage Raymond James called Citi's buyback request "very conservative."
At Citi's closing share price of $45.00 on Thursday, the $1.2 billion would buy back roughly 27 million shares, representing less than 1 percent of Citi's total outstanding shares.
Citigroup said it had scored itself marginally better than had the Fed under same hypothetical stress scenario on capital. Citigroup figured its Tier 1 common equity ratio would fall no lower than 8.4 percent, while the Fed put the figure at 8.3 percent. Five percent is the minimum under bank regulations.
The Federal Reserve has said it will announce on March 14 whether it has approved capital plans banks submitted in early January.
Under a stress test last year, the Federal Reserve said Citigroup's capital ratio would have fallen to 4.9 percent under the capital plan the company proposed and the regulator rejected.
At that time, some analysts had expected the company would be allowed to spend as much as $5 billion of its capital.
Citigroup, the third-biggest U.S. bank by assets, received multiple bailouts from the government during the financial crisis.