It didn’t take long for Morgan Stanley's (MS) conditional approval from the Federal Reserve to throw investors a bone. Minutes after the Federal Reserve cleared 31 banks to return capital to shareholders the firm announced plans to repurchase up to $3.5 billion of outstanding common stock for the four quarters beginning in the third quarter of 2016 through the end of the second quarter of 2017.
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The firm will also increase the quarterly common stock dividend to $0.20 per share from the current $0.15 per share, beginning with the common stock dividend expected to be declared for the third quarter of 2016.
James Gorman, Chairman and Chief Executive Officer of Morgan Stanley, said, "We are very pleased to be able to increase our capital return to shareholders for the fourth consecutive year. Returning additional capital to our shareholders is a key element of our strategic plan. In addition, we are committed to addressing the Fed`s concerns about our capital planning process and fully expect to meet their requirements within the established timeframe."
Bank of America (BAC) also announced plans to increase its quarterly common stock dividend by 50 percent to $0.075 per share. In a press release, the CEO Brian Moynihan said “Over the last few years, we have significantly strengthened our company and increased our earnings as we execute a straightforward strategy focused on responsible growth. This improvement has allowed us to take a significant step toward returning more capital to shareholders.”