Fed to allow some big US banks to boost dividends

The Federal Reserve will allow some of the largest US banks to boost or restart dividends payments this year but will restrict the amounts to 30% or less of the company's anticipated earnings, the central bank said on Friday.

The Fed will now start notifying the 19 largest banks, including Citigroup, Bank of America and Goldman Sachs, whether they passed the second round of stress tests and whether they have won approval to pay out dividends.

Improvements in economic conditions and capital positions of the largest financial institutions has assuaged central bank concerns. From the end of 2008 through 2010, common equity increased by more than USD 300 billion at the big banks, the Fed said.

The Fed did not release results of the stress tests.