Fed rejects Citigroup's capital plan in stress test

The US lender was dealt a blow in its bid to reward investors, while 25 banks' plans were approved

Citigroup failed to get Federal Reserve approval to reward investors with dividends and stock buybacks, a significant blow to chief executive Michael Corbat's effort to bolster the bank's reputation following a 2008 government rescue.

The Fed rejected capital plans of five large banks and approved 25 as part of its annual "stress tests" measuring a firm's ability to survive a severe economic downturn. Companies must fare well on the test to win the regulator's approval for returning money to shareholders.

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