The Federal Reserve announced the results two days earlier than planned with just four of 19 banks tested failing the austere stress tests.
He says: “Encouragingly, those banks that passed have generally announced payout ratios better than the market expected.
“For these banks, Federal Reserve chairman Ben Benanke has given the all clear to start share buy-backs and increase dividends again.”
The fund manager adds: “Coming after the European Central Bank’s long term refinancing operation (LTRO), which provided much needed stability to Europe’s financial system, the potential effects of this latest news should not be underestimated. (article continues below)
“The US Fed has effectively released the banks from the shackles of excessive capital control, a factor which had been a major overhang for the sector.”
De Blonay says although there are further threats, such as the Dodd-Frank financial reforms, the news was “a significant step in the recovery of US banks”.