JPMorgan, USBancorp Dodge Dividend Threat: Analyst

NEW YORK (TheStreet) -- JPMorgan Chase (JPM) and US Bancorp (USB) dividends appear safe from a new bank capital rule that originally appeared likely to limit the payouts, according to a research report published Tuesday from Citigroup analyst Keith Horowitz.

At issue is an amendment to the 2010 Dodd-Frank Act known as the "Collins floor." Named for Sen. Susan Collins (R., Maine) and supported by then FDIC Chairman Sheila Bair, the amendment aimed to create a floor for bank capital under new international guidelines known as Basel 3. According to Horowitz's note, the purpose of the amendment was to be sure an "advanced" method of calculating bank capital under Basel 3 did not result in a bank having less capital under "generally applicable rules," which he adds "effectively means 'standard approach' calculations," as proposed by the Federal Reserve in June.

Horowitz had originally feared the Collins floor "could create a new tougher binding constraint on bank capital and payout ratios for some banks, particularly [JPMorgan], but we now believe this is not the case," he wrote. Horowitz cited "conversations we recently had with [JPMorgan] and other industry sources who received clarification late last week from regulators," to explain his new interpretation of the rule.

While Horowitz sees "the most obvious benefit" to JPMorgan, he also believes US Bancorp will benefit from the new rule as he understands it. He adds that Bank of America (BAC)Morgan Stanley (MS) and Goldman Sachs (GS) have "not yet disclosed an estimate of a calculation using the standard approach," while Wells Fargo (WFC)and PNC Financial (PNC) "have indicated expectations of being under the advanced approach."

-- Written by Dan Freed in New York.

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