Over the last five trading days, optimism rose among investors as the Federal Reserve approved most of the banks’ 2015 Capital Plan after clearance of the stress tests last week. This year, 28 financial institutions out of 31 in the Comprehensive Capital Analysis and Review (CCAR) got the Fed’s approval.

However, the capital plans of U.S. units of Germany-based Deutsche Bank AG (DB - Analyst Report) and Spain’s Banco Santander, S.A. (SAN - Snapshot Report) have been rejected by the Fed based on certain “qualitative” reasons, while Bank of America Corp. (BAC - Analyst Report) received contingent approval as it is required to on submit its revised capital plan by the end of September. This is because the Fed has identified certain loopholes in its capital planning processes.

The approval from the Fed to increase dividend payment and accelerate share buyback program will definitely help banks attract more investments going forward.

Other activities marked the usual legal issues and restructuring activities. Citigroup Inc. (C - Analyst Report) continued with its streamlining operations while past business misconducts continue to trouble banks including JPMorgan Chase & Co. (JPM - Analyst Report) and The PNC Financial Services Group, Inc. (PNC -Analyst Report).

(Read the last Bank Stock Roundup for Mar 6, 2015)

Recap of the Week’s Most Important Developments:

1. In furtherance of its strategy to shed international operations, Citigroup is eyeing the sale of its Central America retail units to Madrid-based Banco Popular. The deal is expected to be valued at $1.5 billion. The sale price of the units is anticipated to exceed the units’ book value marginally and the buyer would take over certain liabilities.

However, spokesmen from both companies declined to comment. The units at which Citigroup is planning to sell retail operations include Costa Rica, El Salvador, Guatemala, Nicaragua and Panama. (Read more: Citi to Vend Latin American Units for $1.5B to Banco Popular)

2. Citigroup has been in a long legal tussle due to the conflicting stance between the U.S. court and the government of Argentina. The Wall Street banking giant failed in its efforts to lift a court ruling that restricts the bank to make payments on bonds, which were issued under Argentine law following the South American country’s default in 2001. Notably, a payment of a $3.7 million is due on Mar 31.

Turning down Citigroup’s appeal to process payment, U.S. District Judge Thomas Griesa in Manhattan said the bank is restricted to process payments on the dollar-denominated Argentine exchange bonds as allowing the company to process the payments would constitute violation of Argentine law that requires the nation to treat bondholders equally.

3. PNC Financial has been asked by a federal jury in the U.S. District Court that the company must pay $391 million in damages in a prearranged funerals lawsuit. The case filed in 2009 relates to the insurance fraud at the former National Prearranged Services (NPS), in which PNC Financial’s predecessor bank – Allegiant Bank  was a trustee from 1998 to 2004. PNC Financial had acquired Allegiant Bank in 2008.

The 2009 lawsuit was filed by state life and health guarantee associations and a special receiver set up to wind down NPS. The suit alleged that the trustees, including Allegiant Bank, failed to monitor assets of NPS. They were accused of negligence and failure to unearth the fraud, which enabled the company officials to swindle the money.

PNC Financial’s penalty amount consists of $355 million in compensatory damages and $35.5 million in punitive damages. The jury also ordered the now-defunct Forever Enterprises holding company to pay $100 million in damages. (Read more: PNC Financial to Pay $391M Damages in Prepaid Funeral Case)

4. Past business misconducts continue to trouble JPMorgan. A class action lawsuit has been filed against the bank alleging manipulation of Californian electricity market between 2010 and 2012. The case, filed in the U.S. District Court for the Southern District of California, accuses JPMorgan of violating the Racketeer Influenced and Corrupt Organizations Act (“RICO”) while it sold power to several gas plants. The lawsuit has been filed by three Californian ratepayers on behalf of the retail power customers of the state.

The lawsuit stated “… (J.P. Morgan) resorted to illegal market manipulation to turn the inefficient, money-losing generators into cash cows." The plaintiffs seek damages for Californian residents who had to pay higher electricity rates owing to JPMorgan’s alleged misconduct. (Read more: JPMorgan Sued Over Californian Power Market Manipulation)

5. U.S. Bancorp (USB - Analyst Report) President and Chief Executive Officer (CEO) Richard Davis’ total compensation package was hiked by over 79% on a year-over-year basis, according to a Securities and Exchange Commission (SEC) filing. The annual salary of $19.4 million came on the heels of improved growth throughout 2014. Davis, also the chairman of U.S. Bancorp, received an increased base salary of $1.2 million compared with $1.1 million in 2013.

Moreover, stock awards of $5.6 million remunerated to him reflected a year-over-year rise of over 7%. His pay package also included $1.9 million as option awards and $2.5 million as non-equity incentive plan compensation.

Price Performance

Overall, investors were optimistic over the banking stocks as most of the banks received the Fed’s approval. Growing optimism over banks’ growth prospects driven by restructuring plans were also the driving factor.

In the last five trading sessions, PNC Financial and Capital One Financial Corp. (COF - Analyst Report) were the major gainers, both with a 3.1% price increase. Moreover, Citigroup and Wells Fargo & Co. (WFC - Analyst Report) gained 1.9% and 1.8%, respectively. However, BofA declined 0.8%.

Over the last six months, PNC Financial and Wells Fargo were the top performers, with their shares advancing 13.4% and 9%, respectively. Moreover, U.S. Bancorp witnessed a 6.6% price increase over the same time frame. However, BofA declined 3.6%.

What Next in the Banking Universe?

In the coming five days, nothing big is expected on the banking front. Unless there is a major upheaval in the global market, we believe that bank stocks will continue to perform in a similar manner.