Goldman Sachs And Other Major Banks Suspend Share Buybacks Due to COVID-19

The pandemic presents an “unprecedented” challenge, the Financial Forum states

As a consequence of the coronavirus outbreak, the Financial Forum, which includes Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley, Goldman Sachs, and two other banks, announced yesterday that its members would stop stock buybacks through the second quarter of this years.

The group sees the COVI-19 pandemic as an unprecedented challenge for the world and the global economy.

“The largest U.S. banks have an unquestioned ability and commitment to supporting our customers, clients and the nation,” it says.

“The decision on buybacks is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services,” the Forum’s statement states.

Buybacks enable firms to return capital to their shareholders and can help boost stock prices.

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Since the start of 2020, shares have fallen sharply due to the pandemic, as economic activity in many industries slowed down drastically.

Voluntary action

Goldman Sachs issued a statement today on the group’s announcement, saying that the voluntary action, determined jointly by all member banks, positions the firm to deliver greater capital and liquidity to its clients as they seek to navigate challenged markets.

“We have a deep appreciation for our responsibility to deliver the critical advice and solutions clients need no matter the market conditions, as we have throughout our history,” the bank says.

Goldman Sachs notes that this pause is consistent with its announced policy on share repurchases, which permits it the flexibility to adjust or suspend their activity as they deem appropriate.

“The firm stands ready to deploy all of its resources in support of all of its constituencies as it engages with its corporate and institutional clients and makes specific accommodations for its consumer and small business customers,” Goldman Sachs concludes.

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