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The Federal Reserve has further loosened restrictions on dividends and buybacks imposed on the biggest US banks during Covid-19, as it released an analysis showing lenders could suffer almost $500bn in losses and still comfortably meet capital requirements.

Twenty-three banks, including JPMorgan Chase and Goldman Sachs, underwent “stress tests” by the Fed that modelled the financial damage of a series of doomsday scenarios, including a US stock market crash, a drop in economic output and substantial distress in commercial real estate.

The results, released yesterday, paved the way for billions of dollars in stock buybacks and dividends, which investors have been eagerly anticipating.

The Fed expects banks to wait until Monday to scrutinise the results of the stress tests before announcing any plans for shareholder payouts.

Five stories in the news

1. Sanjeev Gupta wins legal reprieve The metals tycoon has won a three-month reprieve from legal action intended to force some of his companies — including Liberty Commodities and Speciality Steel UK — out of business over unpaid debts, as the group’s lenders shifted to a more consensual approach.

2. Toshiba chair ousted Shareholders voted against the reappointment of Osamu Nagayama, the chair of the company’s board, today in the wake of an explosive report into alleged government collusion, a historic vote that tipped one of the country’s most celebrated corporate names into uncharted territory and marked a watershed for investor activism in Japan.

3. Putin summit clash European leaders locked horns over a Franco-German push for an EU summit with Russian president Vladimir Putin, as critics warned against “free concessions” amid worsening relations with the Kremlin. Krisjanis Karins, Latvia’s prime minister, cautioned against giving away too much to Putin, while Poland’s prime minister Mateusz Morawiecki said dialogue should only happen if there was “de-escalation”.

4. Hedge funds reassess after $12bn meme stock hit Hedge funds that bet on falling share prices are stepping up efforts to spot the next GameStop, after this year’s “meme stock” bonanza left the industry nursing billions of dollars of losses in just six months. In recent weeks, these stocks have staged a second rally.

5. UK innovation plans target science schools and R&D spending Ministers are drawing up plans for science-focused schools, billions of pounds in research and development spending and better access to private funding for tech-focused companies, as part of an innovation strategy to be launched next month.

• George Osborne, the former Conservative chancellor, has been appointed the next chair of the trustees of the British Museum.

Coronavirus digest

• Thousands of international students from “red-list” countries could be blocked from starting courses in England this autumn because of insufficient quarantine capacity.

• The emperor of Japan is “concerned” about holding the Olympic Games during the pandemic, according to his most senior official, a rare intervention that skirted a ban on Imperial involvement in politics.

• JPMorgan Chase, America’s largest bank, urged US staff to get vaccinated ahead of a planned return to the office next month.

• Fancy a trip to Malta, the Balearic Islands or Madeira? Boris Johnson has approved a resumption of overseas holidays to some leading destinations.

Good things happen when governments work from home, writes Robert Shrimsley, a trend that could become one of the pandemic’s best legacies, ushering in cheaper capitals, happier citizens and better public services. Sign up for our Coronavirus Business Update newsletter.

The day ahead

London vaccine summit Today’s meeting will bring together senior officials, NHS London, mayor Sadiq Khan, clinical experts and community leaders from across the capital to address the capital’s lagging vaccine uptake.

Economic data GfK’s measure of German consumer confidence is forecast to show a rise in June, while economists expect another increase in US consumer spending in May. (WSJ)

Biden meets Afghanistan’s president Joe Biden will host Ashraf Ghani and Abdullah Abdullah, who leads peace talks with the Taliban, at the White House to discuss the US troop withdrawal. Biden’s administration has said it intends to relocate Afghans who assisted US troops as they await visa approval. (Reuters, NYT)

Derek Chauvin sentencing over George Floyd murder The former Minneapolis police officer will be sentenced after being found guilty in April of three charges in the death of George Floyd last year. Chauvin could face up to 30 years in prison. (AP)

What else we’re reading

Venice counts costs of tourism As cities emerge from pandemic lockdowns, luring back foreign visitors will be vital to restarting economies. Venice is almost entirely reliant on the roughly 30m tourists who came each year before coronavirus. Yet the return of mass tourism has not been universally welcomed by the city’s residents.

China’s century of revolutions Deng Xiaoping, who became China’s paramount leader in 1978, is rightly credited with a clutch of commercial liberalisations. But his political reforms also targeted the Chinese Communist party’s tragic flaw: that concentrated power, if left unchecked, slides ineluctably into political viciousness and economic stagnation. As China’s ruling party turns 100, James Kynge takes a look back at its history.

Meet the anti-surveillance activists In the eight years since the Edward Snowden leaks revealed the breadth of mass surveillance, public anxiety about privacy has steadily grown. Fired by what they see as unchecked state power, activists have started fighting back. “Crypto parties” — workshops on how to use the internet anonymously — are just the start.

Why phoney medicine has lasting allure Humans can’t seem to deal with the idea of a disease for which there is no treatment. When we feel that experts have been unable to help, we seek more speculative remedies, even if we do not expect much. That’s probably why phoney treatments have such enduring popularity, writes Tim Harford.

Troops in the war on waste Inspired by her children, Gillian Tett writes that she has resolved to make the “circular economy” work at home to cut down on food waste. For those with folk memories of wartime rationing, there’s reason to celebrate the fact that culture can change, she says.

Books

FT deputy books editor Laura Battle shared her 2021 summer reads. Her favourite books so far? Klara and the Sun by Kazuo Ishiguro, Luster by Raven Leilani, A Lonely Man by Chris Power and many more.