SOURCE: The Bedford Report

The Bedford Report

February 15, 2011 11:25 ET

Citigroup & KeyCorp Struggling to Return Shareholder Value

The Bedford Report Provides Analyst Research on Citigroup & KeyCorp

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 Citigroup, Inc. (NYSE: C) and KeyCorp (NYSE: KEY). Access to the full company reports can be found at:

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 and get exclusive access to our numerous analyst reports and industry newsletters.

When Citigroup reported earnings last month, the company's CEO, Vikram Pandit, said that "2012 is the right year for us to return capital." Pandit added that Citi wants "to make sure that we are in exactly the right place on Basel III."

Last month KeyCorp said it has submitted to regulators its proposal to pay back its $2.5 billion in TARP funds. The bank included its plan earlier this month when it submitted documents for the current round of stress tests. One of the guidelines set by the Federal Reserve in November was that banks must make their required payments under the Troubled Asset Relief Program before any such dividend hikes can take place.

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