Citigroup Inc. and Bank of America Corp. are among lenders that may have to temper plans to raise dividends and buy back stock next year as the Federal Reserve strengthens capital tests for the biggest U.S. banks.
Sales of U.S. structured notes tied to Bank of America Corp. have soared this year as issuance of securities linked to a single stock increases, with investors accepting higher volatility for potentially greater gains.
Some of the biggest U.S. commercial banks, from Bank of America Corp. to JPMorgan Chase & Co., are still digging out from the financial crisis, facing settlements and legal fees to resolve claims tied to their mortgage portfolios that could cost billions of dollars.
Bank of America Corp. Chief Executive Officer Brian T. Moynihan said the firm’s dividend may not rise from 1 cent a share until next year as the biggest U.S. lender struggles to tame costs tied to defective mortgages.
MetLife Inc. , the life insurer whose bank unit has about $17 billion in assets, said its lender may miss profit targets this year as higher interest rates squeeze margins and reduce customer demand for mortgages.