New York

BIG US banks, including JPMorgan Chase & Co and Citigroup Inc, are expected to win Federal Reserve backing later on Wednesday to buy back more shares and increase their dividends in the coming year, but the approvals may be as much about the institutions' financial engineering as any improvement in their health.

Much of the money for buybacks and higher dividends is coming from the banks issuing securities known as preferred shares. These shares are a type of equity that pays regular, relatively high dividends. To investors, they look a lot like bonds that pay interest. But for regulators, preferred shares serve as a cushion against any future losses, in part because they never have to be repaid.