Updated from 8:10 a.m. ESTIn a widely expected move, Wells Fargo ( WFC) became the last of the major banks to slash its dividend on Friday, calling the decision "very difficult" but necessary. Wells cut its dividend to 5 cents a share from 34 cents, enabling the bank to retain an additional $5 billion in common equity in 2009. The nickel-per-quarter payout represents a 0.6% yield as of Thursday's closing share price, down from a 4.2% yield. "This was a very difficult decision but it's absolutely right for our company and our shareholders because it will further strengthen our ability to grow market share and to continue our long track record of profitable growth," President and CEO John Stumpf said in a statement. "We will return to a more normalized dividend level as soon as practical." Investors were awaiting the announcement from Wells, the last major bank to put capital preservation ahead of dividend payouts. BofA first reported a hearty dividend cut in January, from 32 cents to 1 cent. Then came JPMorgan Chase ( JPM) last month, from 38 cents to 5 cents, as Citi halted its dividend on common and preferred shares altogether. This week brought announcements from PNC Financial Group ( PNC), from 66 cents to 10 cents, and US Bancorp ( USB), from 42.5 cents to a nickel. While shares of the San Francisco-based bank surged over 10% at $8.93 in morning trading following the announcement on a mixture of relief and short covering, by the afternoon they had given up most of those gains. Recently, the stock was trading up 2.6%, at $8.33. Wells shares had shed as much as 20% in Thursday's session and closed down $1.54, or 16%, at $8.12. The drop was fueled by Moody's Investors Service's warning it could downgrade Wells and Bank of America ( BAC). It contributed to a wide selloff that sent Citigroup ( C) stock under $1, as investors worried about the health of the banking system. Sandler O'Neill Partners analyst R. Scott Siefers, who rates Wells a "hold," points out that Wells may not be out of the woods yet. Competitors' shares have all slumped further downward since their dividend-cut announcements. "