Business & Finance
Business and FinanceBusiness and Finance 
Tue, February 15, 2011
Bank of America & PNC Confident in Their Financial Strength
NEW YORK, NY--(Marketwire - February 15, 2011) - Once again investors are looking to banks as "safe" companies that will post steady profits and hopefully begin providing steady dividends. While certain major banks have said dividend increases are a top priority, others explained there is still too much uncertainty in the sector to return cash to shareholders. The Bedford Report examines the outlook for companies in the Financial Sector and provides research reports on Bank of America Corporation (
[ www.bedfordreport.com/2011-02-BAC ]
[ www.bedfordreport.com/2011-02-PNC ]
Presently the fed is analyzing data provided by 19 of the largest US banks and is putting them through stress tests similar to those faced in 2009. In 2009 the examination was meant to greatly reduce the uncertainty regarding the financial system, as investors wondered about the value of mortgage-related securities held by the nation's largest banks.
Banks will also have to adhere to a new set of capital standards known as Basel III, if they hope to increase dividends. According to the Basel Committee on Banking Supervision, Basel III will set a tougher standard for the quality of capital as well as the assessment of risks on a bank's balance sheet. According to the proposals under Basel III, only if a bank operating in a steady economic environment maintains a Tier 1 capital ratio of 12% would it be allowed to pay or increase common dividends.
The Bedford Report releases regular market updates on the Financial Sector so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at [ www.bedfordreport.com ] and get exclusive access to our numerous analyst reports and industry newsletters.
Last month Bank of America CEO Brian Moynihan said that he expects the company will be in a position to "modestly" raise its dividend in the second half of 2011. Moynihan added that the bank expects to exceed capital guidelines as they are phased in, and executives estimated the costs Bank of America could face in settling "private label" mortgage repurchase claims.
According to a recent report from RBC Capital, PNC Financial could be given the thumbs up from the Federal Reserve to raise their dividends in the next couple of weeks. PNC CEO James Rohr said last month that the company is "in a solid position to deliver greater shareholder value this year." PNC CFO Richard Johnson added that the bank is well capitalized "and should be when the (Basel III) rules go into effect in 2013."
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