Citigroup Has Built Up a Lot of Capital but Is Still Not Repurchasing Stock. What Gives?

Citigroup Has Built Up a Lot of Capital but Is Still Not Repurchasing Stock. What Gives?

After a pause last year, the large banks JPMorgan Chase and Wells Fargo announced in their recent earnings calls that they are planning to resume share repurchases in the

After a pause last year, the large banks JPMorgan Chase and Wells Fargo announced in their recent earnings calls that they are planning to resume share repurchases in the

current quarter. Share repurchases are a big reason investors buy big bank stocks, so it's never good to see large banks not buying back shares. But despite the

current quarter. Share repurchases are a big reason investors buy big bank stocks, so it's never good to see large banks not buying back shares. But despite the

moves of its peers and having built significant levels of capital in the fourth quarter, Citigroup (NYSE: C) said that it is still not planning to repurchase shares in the first

moves of its peers and having built significant levels of capital in the fourth quarter, Citigroup (NYSE: C) said that it is still not planning to repurchase shares in the first

quarter, much to the chagrin of frustrated analysts and investors. Let's take a look at why this is the case and when Citigroup may be able to resume share repurchases. The

quarter, much to the chagrin of frustrated analysts and investors. Let's take a look at why this is the case and when Citigroup may be able to resume share repurchases. The

bank did a good job of building capital Several large banks had to pause share repurchases last year as they prepared for higher regulatory capital requirements this year and

bank did a good job of building capital Several large banks had to pause share repurchases last year as they prepared for higher regulatory capital requirements this year and

potentially in 2024. Regulatory capital requirements change year to year based on annual stress tests conducted by the Federal Reserve, and regulatory capital rules have

potentially in 2024. Regulatory capital requirements change year to year based on annual stress tests conducted by the Federal Reserve, and regulatory capital rules have

more or less been in limbo since the Great Recession. For instance, banks are still waiting on the Basel Committee on Banking Supervision, an international body that leads the

more or less been in limbo since the Great Recession. For instance, banks are still waiting on the Basel Committee on Banking Supervision, an international body that leads the

charge on bank regulation, to finalize capital rules, which is expected to happen soon. A good way to measure a bank's regulatory capital is by looking at its common equity

charge on bank regulation, to finalize capital rules, which is expected to happen soon. A good way to measure a bank's regulatory capital is by looking at its common equity

tier 1 (CET1) capital ratio, which measures a bank's core capital expressed as a percentage of total risk-weighted assets such as loans. If banks have capital that exceeds their

tier 1 (CET1) capital ratio, which measures a bank's core capital expressed as a percentage of total risk-weighted assets such as loans. If banks have capital that exceeds their

regulatory requirement, this can be returned to shareholders in the form of dividends or share buybacks.

regulatory requirement, this can be returned to shareholders in the form of dividends or share buybacks.