The Financial Services Forum, which includes some of the biggest banks in the United States, announced Sunday that its members would stop stock buybacks through the second quarter of the year because of the coronavirus pandemic.
The group — which includes JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley, Wells Fargo, Goldman Sachs and two other banks — said in a statement that the pandemic was an "unprecedented challenge."
"The COVID-19 pandemic is an unprecedented challenge for the world and the global economy and the largest U.S. banks have an unquestioned ability and commitment to supporting our customers, clients and the nation," the forum said.
Buybacks are one way for companies to return capital to their shareholders and can help boost the price of stocks. In the fourth quarter of 2019, JPMorgan alone did more than $6 billion in net repurchases, which accounts for extra shares issued to employees.
Bank stocks have been pummeled so far this year as the virus has spread around the world. Shares of JPMorgan and Morgan Stanley are both down more than 25% since the start of 2020, while shares of Citi have fallen more than 36%.
As the pandemic has sharply slowed down economic activity in certain industries, such as travel, major companies like Boeing have announced that they will draw down their major credit lines from banks.
"The decision on buybacks is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services," the Forum said.
The announcement comes on the heels of a major move by the Federal Reserve, which cut its main interest rate target by 1% and launched a program of at least $700 billion in asset purchases. The central bank also slashed reserve requirements for thousands of banks to zero.
Fed Chairman Jerome Powell said in a press conference on Sunday that the Fed has given "broad, general guidance" to the major banks.
"We'd like them to use their buffers to provide loans and also to work with their borrowers. As you can see, we're providing a lot of guidance to them across a wide range, and they're saying they have every intention of doing that. That's good to hear," Powell said.
Stock buybacks have been criticized by progressive politicians, including Vermont Sen. Bernie Sanders, who proposed to ban the practice as part of his presidential campaign.
The two other member banks of the forum are State Street and Bank of New York Mellon.