The biggest banks in the US have decided to stop buying their own shares in order to use those funds to lend to their customers affected by the coronavirus.

Faced with the growing financial distress of their individual and business clients, the banks are shifting their immediate priority from repurchasing their own stocks to extending loans to their customers.

According to the Financial Services Forum, an industry trade group, eight members would halt share buybacks through 30 June.

The list includes the biggest names in the banking sector. JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon and State Street.

Pressure from lawmakers

The decision comes after US lawmakers urged the banks to stop using capital to repurchase shares, and instead to support customers and the broader economy.

“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 group said in a statement.

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The Financial Services Forum said its 8 member banks have grown their collective capital by more than 40% in the last decade to $914bn (£792bn).

The decision also comes within hours of the U.S. Federal Reserve slashing interest rates further.

In addition, New York City, the home of Wall Street, has detailed plans to close schools and senior centres. The city has also toughened enforcement of restrictions on bars and restaurants.

Guidance from the Fed

Federal Reserve Chairman Jerome Powell said the Fed has given broad general guidance to the banks to “use their buffers to provide loans and also to work with their borrowers.”

“We hear the banks saying that is exactly what they are going to do, so that’s a good thing,” Powell added.

“Our collective objective”

It is “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,” according to the group’s statement.

JPMorgan, the largest U.S. bank, said in a separate statement that it will use the extra funds to support lending to individuals, business owners and governments, and add liquidity in capital markets, “even if circumstances get dramatically worse.”