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America’s biggest banks will learn the results of their latest stress tests from the US Federal Reserve this week, with a passing grade expected to be a catalyst for billions of dollars in stock buybacks and dividends.

The expectation that banks will return more money to shareholders is a sign of how much cash the US banking sector has amassed during the pandemic.

The likes of Goldman Sachs and JPMorgan Chase have been bolstered by government stimulus and buoyant revenues from trading and dealmaking.

The Fed capped dividends and banned stock buybacks last year at the outbreak of the Covid-19 pandemic. The central bank loosened some of these restrictions at the start of 2021 but still limited the amount of money banks could return to…

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