March 26 (Bloomberg) -- Bank of America Corp. quintupled its dividend to 5 cents, the first payout increase since 2007, after the Federal Reserve approved its capital plan.
The new quarterly dividend begins in the second quarter, the Charlotte, North Carolina-based bank said today in a statement. Bank of America’s payout had been stuck at 1 cent since 2009, when the lender cut it amid the financial crisis. The firm’s board also authorized $4 billion in share repurchases.
Regulators seeking to prevent a repeat of the 2008 credit market freeze have run annual tests on how the largest lenders would fare in a similar recession or economic shock. The Fed blocked plans for a dividend increase at Bank of America in 2011, and the firm won permission for a $5 billion stock buyback last year. Bank of America is the second-largest U.S. lender.
Morgan Stanley doubled its quarterly dividend to 10 cents a share after the Fed approved its capital plan, the New York- based bank said today in a statement. Citigroup Inc., one of five banks whose plans were rejected, said in a separate statement that the Fed will allow it to continue its current 1- cent quarterly dividend.