Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

If the post-election rally in U.S. bank stocks caught you unawares, you're not alone: Jamie Dimon didn't see it coming either.

At a conference in New York on Tuesday, the chairman and CEO of JPMorgan Chase & Co. said he "kind of got surprised" by the market reaction to Donald Trump's presidential win -- although to the extent that the Republican's administration and policies are likely to be more beneficial to banks, it does make sense. 

The Haves and the..Haves
U.S. banks have been among the biggest beneficiaries of Donald Trump's presidential win
Source: Bloomberg

JPMorgan's shares have surged 19 percent since Nov. 8, enough to prompt Dimon to muse that at a "certain price," he'd prefer to use excess cash to pay shareholders a special dividend rather than buy back shares. That makes sense, too. But if Dimon is serious about a special dividend, he should act fairly quickly. That's because the Federal Reserve's Board of Governors has proposed changes to the central bank's Comprehensive Capital Analysis and Review (or CCAR) rules that could put a curb on such payouts. 

Currently, bank holding companies are able to stray from their Fed-approved capital plans to buy back shares or pay out special dividends if the total amount spent is less than 1 percent of Tier 1 capital (provided that they notify the Fed by at least 15 calendar days before such an event). The proposed rules, which could take effect by April 1, would slice that threshold to just 0.25 percent and introduce a "blackout period" while the Fed is conducting its annual bank capital review during the second quarter. 

With JPMorgan shares basically flat on Tuesday, shareholders are correctly containing their enthusiasm -- after all, they don't even know if Dimon will follow through. But if management acts fast, it could make a big difference to them. Current rules would allow for a payout of $1.81 billion, or 50.1 cents a share, versus just $452.5 million, or 12.6 cents a share, under the proposed guidelines. That larger dividend would bolster the New York lender's indicated payout ratio to roughly 84 percent from 82 percent at present, according to data from Bloomberg Intelligence. It'd also help justify its current valuation. 

Perfecting the Payout
For Citigroup and Bank of America especially, management should favor buybacks over special dividends as a way to return capital to shareholders
Source: Bloomberg

JPMorgan may be joined by other banks including Bank of America in a race against the clock, although at the Charlotte, North Carolina-based bank, buybacks will likely take priority over special dividends as long as its price to tangible book value remains at a discount to peers. 

Fifth Place?
A special dividend would enable JPMorgan to leapfrog rivals whose payout ratios currently best its own
Source: Bloomberg Intelligence
2016 indicated payout is calculated from companies' announced dividends and buybacks divided by consensus 3Q16-2Q17 current net income estimates

Citigroup Inc. has already made its move, choosing repurchases over a special dividend. Last month, it added $1.75 billion in buybacks, within the Fed's 1 percent parameter. Whether it's JPMorgan or another bank that's next out of the blocks, shareholders should hope that any action occurs sooner rather than later.  

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Gillian Tan in New York at

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