STT State Street Corporation

By David Benoit 

The biggest U.S. banks put share buybacks on hold Sunday and pledged to put their capital to use helping consumers and businesses struggling with the rapid economic slowdown caused by the novel coronavirus outbreak.

The Financial Services Forum, which represents the biggest U.S. lenders and custody banks, announced the decision to suspend buybacks after the Federal Reserve cut its benchmark interest rate to near zero and took steps to prevent market disruptions and keep money flowing through the financial system.

The novel coronavirus pandemic "is an unprecedented challenge for the world and the global economy," the forum said. The group's members are JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc., Morgan Stanley, Bank of New York Mellon Corp. and State Street Corp.

Several U.S. banks have taken steps to ease the pain for consumers and businesses, waiving some fees and offering to work with struggling borrowers. Leaders of the biggest banks traveled to Washington last week to tell President Trump the industry was in good shape, despite the turmoil, and ready to help.

"The largest U.S. banks have an unquestioned ability and commitment to supporting our customers, clients and the nation," the forum said Sunday.

Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee, last week called on banks to suspend their buybacks. "Banks need to be investing in their communities right now, not investing in their CEOs' stock portfolios," the Ohio senator said on the Senate floor Thursday.

The novel coronavirus outbreak is the biggest test of banks' stability since the financial crisis. The Fed's emergency rate cut -- its second in recent weeks -- will crimp profits on their bread-and-butter lending businesses.

Bank stocks have fallen further than the broader market since the coronavirus selloff began late last month. The KBW Nasdaq Bank Index is down 34% so far this year and 19% this month alone.

Write to David Benoit at david.benoit@wsj.com

(END) Dow Jones Newswires

March 15, 2020 19:54 ET (23:54 GMT)

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