Ally Financial (NYSE: ALLY) has announced a plan to repurchase up to $1.6 billion of common stock in 2021.
It comes just weeks after the Federal Reserve cleared the way for banks to conduct stock buybacks, which it had put on hold last March when the pandemic hit. The go-ahead followed a round of stress testing wherein the Fed put the banks through hypothetic scenarios to see how they would function during an extended downturn.
Ally, the 16th largest bank in the country with about $174 billion in assets, will start repurchasing shares in the first quarter. The buyback plan is in accordance with the Fed’s restrictions that limit combined repurchases and dividends to an amount that is less than the average net income of the four preceding quarters.