WASHINGTON (AFP) ― The Federal Reserve approved the capital plans of 25 major U.S. banks after stress tests Wednesday, but turned down those of five others, including Citigroup’s.

The Fed said four of the five ― Citi, HSBC North America, RBS Citizens Financial and Santander Holdings USA ― had “qualitative” shortfalls in their capital foundations, while the fifth, Zions Bancorporation, had failed the stress test with its basic capital ratio falling under the minimum.

The objection means the five cannot move ahead with any increase in capital distributions ― dividend payments, share buybacks and other moves ― without strengthening their capital foundations to Fed standards.

These banks “are not permitted to implement their requested plans for increased capital distributions,” the Fed said.

They “are required to resubmit their capital plans to the Federal Reserve following substantial remediation of the issues that led to the objections.”

But the Fed said the five are permitted to continue with existing capital distribution programs.

Of the five, Zions Bancorp was the only one to fail a stress test ― an examination to see how it would hold up under a severe economic crisis.

As announced last week, its basic capital strength fell below the five percent threshold in the test.

The Fed said overall the banking industry is much stronger since it instituted the stress tests in 2009 as a way of forcing strengthening of major institutions coming out of the financial crisis.

It said the 30 banks’ aggregate tier one common equity ratio, which compares high-quality capital to risk-weighted assets, has more than doubled to 11.6 percent at the end of last year from 5.5 percent in the first quarter of 2009.

That capital building trend will continue, the Fed said, at least through the first quarter of 2015.

Even so, said Federal Reserve Governor Daniel Tarullo, “both the firms and supervisors have more work to do as we continue to raise expectations for the quality of risk management in the nation’s largest banks.”

Citigroup said it had been planning a $6.4 billion share repurchase program and a quarterly dividend hike to 5 cents before the Fed’s objections.

“Needless to say, we are deeply disappointed by the Fed’s decision regarding the additional capital actions we requested,” said chief executive Michael Corbat in a statement.

“Despite whatever shortcomings the Fed saw in our capital planning process, we have made tremendous progress over the past several years in enhancing our capital position and Citi remains one of the best-capitalized financial institutions in the world.”