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Bank Stocks Jump as Stress Test Pass May Unleash $80 Billion in Capital Returns

Martin Baccardax

U.S. bank stocks were higher across the board in pre-market trading Friday after nearly all of the 35 lenders that underwent the Federal Reserve's stress tests were given the nod to potentially pass on higher dividend payments and buybacks to their investors. The second stage of the Fed's tests, which looked at both the quality of the capital held on lenders' balance sheets and probed the management and systems in place to whether a sharp global recession and surge in domestic unemployment, declared that all but four of the 35 banks tests were cleared to go ahead with planned capital returns. Analysts at KBW estimate the biggest six banks could increase returns by around $80 billion as a result of the Fed's approval.